Five best practices for client communications


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Intralinks’ Meghan McAlpine shares five reasons why wealth management groups should think about using online communication platforms to improve the way they interact and share information with their investors; a key consideration today as wealth transfers from baby boomers to millennials.

The wealth management industry is one of the fastest growing segments in financial services. According to McKinsey’s global wealth management survey, it has consistently produced above-GDP revenue growth, attractive profitability with low capital requirements, and ample liquidity.

But when it comes to responding to digital technology and improving the client communication process, wealth managers still have a long way to go. As highlighted in a PwC report1, even though some 69 per cent of HNW individuals use online banking, only 25 per cent of wealth managers offer alternative digital channels to email.

There are still too many middle- and back-office processes that are time and labour intensive and too few automated processes that reduce cost and improve the client relationship.

As Meghan McAlpine, Product Marketing Director at Intralinks, one of the industry’s leading providers of enterprise-strength collaboration technology and whose investor communications portal is used by 37 of the 50 largest private equity firms, explains, a typical private bank has people manually collecting, processing and mailing reports to clients. This leaves them exposed to operational risk. But by leveraging technology to manage client communications, McAlpine believes that wealth managers can improve productivity, security and customer service.

In a recent webinar hosted by Intralinks entitled 5 Best Practices & Lessons Learned for Client Communications2, McAlpine outlined the ways in which wealth managers can use technology to their advantage.

In no specific order, one of the first reasons that McAlpine touched upon was that technology platforms help make the internal content management process more effective and efficient.

“Many private banking groups still don’t have a structured process in place to handle clients and/or are using archaic technology to communicate with their investors. It can be a frustrating and timely process to collect and assemble investment performance and client reports.

“They might be getting some information through the bank’s web portal but other information via their financial advisors, or the fund managers themselves. We are trying to help our private banking clients specifically address these client communication challenges,” says McAlpine.

Indeed, when private banks collect data from their external fund managers the process can be very disjointed.

This ties in to reason #2: to reduce time, money and effort. Using an online communication platform accelerates the process of collecting and distributing documents so that teams can respond to more client and advisor requests in less time.

“We have a tool that facilitates a seamless process whereby managers can self-submit documents to the wealth manager,” says McAlpine. “Then, the wealth manager’s internal operations team can process that data and send it out either to an existing web portal that they have in place, or they can use a branded Intralinks log-in page so that their clients can access the information.”

This in turn can enhance the client experience; reason No3 for adopting an online communication platform.

Wealth managers are starting to understand that the profile of their clients is changing. There is a shift in wealth underway from the baby boomer generation to the younger, millennial generation and their investment behaviour is likewise changing. They are a more tech-aware, tech-reliant investor group so the banks have to evolve the way they interact with these investors.

“Many are seeking out wealth managers with updated and new technology. Those that do not, risk losing out on this client base,” suggests McAlpine. “They are looking for information to be more on-demand and they want it to be delivered electronically to look at any time, any place.

“For private banks, client retention and satisfaction is very important and they are trying to figure out ways to improve this.”

Not only that, but enhancing the client experience puts wealth managers at a distinct competitive advantage when it comes to attracting new clients and keeping financial advisors happy.

“They need to retain top FAs who, like investors, get frustrated if there is a lack of technology. They need it to make their jobs easier, so the more banks are willing to embrace technology the happier FAs are going to be. They are more likely to continue their relationship with the bank as a result,” comments McAlpine.

On the wealth management side, financial advisors are essentially the lynchpin. They are talking to their clients on a regular basis. Therefore, by having access to everything in one place it will help them better serve those clients.

Another reason for thinking about online communication platforms is security; one could argue this is the most important reason, as the world moves towards a digital, network-based society.

Wealth managers hold vast amounts of sensitive, personally identifiable information on their HNW clients. As such, keeping this information secure is of paramount importance at a time when cyber attacks such as phishing emails and other sophisticated social engineering scams continue to rise. The fact that a lot of wealth managers still rely on paper and email distribution leaves them susceptible to such attacks.

“The SEC is scrutinising how firms are handling their clients’ data and issuing penalties for those who do not have strong policies in place so email and sending hard copies of documents are simply not secure enough. They can easily fall into the hands of the wrong person. The bigger risk, though, is reputational risk. If a wealth manager suffers a serious security breach and PII data on their clients is leaked it can lead to significant financial cost and reputational cost. It’s crucial that they handle client data properly,” states McAlpine.

The fifth reason that McAlpine offers is that online platforms can vastly improve the compliance stance of wealth managers. The auditing and reporting piece, when it comes to client communications, is critical and in McAlpine’s opinion, of equal importance is to have a central internal repository to manage data.

“In our experience, a lot of wealth management firms lack such a central repository. They are pulling in information from various sources within the firm, as well as information from financial advisors and fund managers. It’s all rather scattered. A central repository allows them to know exactly where all their information is,” says McAlpine.

Also, it enables content owners to grant or revoke file access at any time.

Access to a single repository means that not only are different teams with a wealth management group (ie operations, sales) able to use the same consistent data set, they can use that data to derive new insights on the clients to improve the business offering and overall client experience.

“That’s right. It can give them the potential to upsell opportunities to clients and give them the opportunity to invest in new asset classes, for example.

“We can implement our platform as a backbone solution, meaning it sits underneath the bank’s own system architecture. They can use their own web portal, retain their branding and look and feel, but with our solution running under the surface wealth managers can seamlessly allow clients to access information across multiple asset classes.

“Security is important but for most clients, what we find is that they are really just trying to enhance the client experience. Online communications platforms can help them better support the changing demands of their clients,” concludes McAlpine.

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