The transformation of the client function in Asset Management

Kevin O'Shaughnessy, Adam Starkey-Smith, Yvie Lewis, Georgie Herr

Over recent years, rapid innovation and high client expectations have put Asset and Wealth Managers under increasing pressure to reimagine their client facing capabilities. Whilst the market becomes increasingly competitive and complex, many Asset and Wealth Managers are struggling to keep pace, with legacy technology and organisational challenges placing constraints on their ability to shift towards a more client-centric operating model.

In this article we examine the main drivers of this transformation, what firms can do to respond to these trends, and some of the key challenges to expect along the way.

What are 3 key themes driving the transformation?

1. Increasing client demand & sophistication

Sophisticated clients expect firms to be able to help solve their challenges and become a trusted partner, instead of “selling” funds.

Clients also want a seamless, omni-channel client experience, which means their journey to engage with an Asset or Wealth Manager is uninterrupted regardless of channel or geography, and they can easily access investment information wherever and whenever they need it.

As part of this, they expect more personalised interactions based on their specific areas of interest, with targeted and specific content that’s proactively delivered to them on a timely and relevant basis.

About three in five consumers (61%) judge a company’s level of innovation based on the communications they send
Broadridge, 2023 CX and Communications Consumer Insights

2. Need for scale

Asset and Wealth Managers continue to have ambitious medium to long-term growth agendas, requiring them to service more clients, increase AuM, and launch potentially more complicated products, all without having the equivalent increase in costs.

The challenge of scaling whilst dealing with uncertain market conditions, fee compression, rising costs, and increased regulatory requirements means it is essential to make the most of your investment in your client transformation initiatives.

3. Technology innovation

Technology and data play a significant role in reshaping Client capabilities -not only to increase efficiency but also to drive scale and create a differentiated client experience.

Technologies like Gen AI (including ChatGPT and other large language models) can offer Asset and Wealth Managers benefits in areas such as content creation, content summarization, and translation. While not a silver bullet for all client needs, they aid with compiling repetitive documentation like Requests for Proposals (RFPs) & Due Diligence Questionnaires (DDQs), or report outlines and summaries, allowing teams to instead focus on value-add client interactions.

Improving the digital client experience is the #1 area for investment
Alpha FMC 2023 Digital Survey

How are asset managers responding to this?

To respond to changing client expectations, drive scale and benefit from technology innovation, Asset and Wealth Managers are having to make significant changes to the way they organize themselves. As a result, we are seeing three common organizational changes proliferating across the industry:

1. From siloed distribution teams to a cohesive client function

More and more Asset Managers are transforming their Distribution function into a Client function (noting some have been doing this for years). This is to become more client-centric; meeting the needs of more sophisticated clients whilst improving client experience and enabling Client teams to effectively serve the requirements of all client types at scale. Within the client function, there are a few prevalent characteristics being adopted across firms:

  • Increasing collaboration across Marketing, Sales, Client Service and Product teams to achieve client goals and create a compelling end-to-end client experience
  • Refining the skills and capabilities of people across the client function to allow them to have more sophisticated conversations with clients and produce high-quality, tailored content
  • Increasing the volume and quality of client data to generate high-value insight which can inform commercial decision making and enable effective client engagement.

2. From department-aligned tech to capabilities

As Asset and Wealth Managers look to invest in their client-facing capabilities, there has been an assessment on how the technology teams best organise themselves and face off to the business. Instead of aligning technology directly to Marketing, Sales, Client Service and Product teams, many firms are adopting a model that aligns technology teams to core capabilities e.g. Content Management, CRM, Data and Analytics etc. This capability-aligned model encourages:

  • Partnership across teams to work towards common objectives and outcomes
  • Improved understanding of other teams and user requirements
  • Technology that serves the needs of the business and clients by supporting processes that sit across multiple teams
  • Reduction in duplicative capabilities and vendors, streamlining the technology stack.

3. From provider to partner

Historically, Distribution functions have looked to technology teams to “provide” technology based on their requirements, often implementing platforms and capabilities without truly understanding what problem the business is trying to solve. Client and technology teams are changing how they operate to ensure technology is aligned to business objectives and  to ensure a common understanding of the commercial and customer drivers which sit behind the deployment of new or improved technology. This requires:

  • A combined business and technology governance group to oversee the strategy, funding, approval, and prioritisation of work
  • Product Managers for each capability who can align the vision, backlog, and roadmap to the most important and valuable client and business needs
  • A focus on “outcomes”, which are measurable or observable changes in behaviour.

Without these three elements, there will be increased risk in misalignment between the business and technology strategy, resulting in significant lower value from client transformation initiatives.

What are some of the common challenges?

Change happens when the pain of staying the same is greater than the pain of the change
Tony Robbins

1.Traditional views on the role of Marketing, Sales, and Client Service

Having siloed teams that aren’t aligned to common business objectives typically leads to limited transparency and/or accountability across functions. Although these teams often perform activities across shared capabilities (e.g. opportunity management, reporting, analytics, etc.), they often have not identified the tools and/or processes to drive efficiencies, which can have a negative impact on the overall client experience.

2. Legacy technology and immature master data management

Without a strong technology architecture and master data strategy, firms will struggle to deliver high quality capabilities at scale and leverage data and insight to drive targeted client engagement. The demand for more advanced technologies like ChatGPT demonstrates the importance of a having a strong data foundation and data science engine before you can start improving the user experience.

82% of digital survey participants are currently running or plan to run data science/AI/ML initiatives, although less than a third of client’s digital budgets are used for sharing data & analytics to their clients
Alpha FMC 2023 Digital Survey

3. New roles and skills

The roles of Product Manager and Product Owner are relatively new, particularly within the Asset Management industry. Hiring experienced Product Managers and Product Owners is challenging due to fierce competition from more digitally savvy industries who are attracting the best talent. Asset Managers are therefore faced with the choice of either upskilling existing resources who have industry knowledge but lack Product Management experience or recruit new hires with Product Management experience but with limited industry knowledge.

How can Alpha help?

Alpha’s Client and Digital practice has a wealth of experience working with industry leaders to improve their client experience, enable revenue growth and drive scale across the full project lifecycle, from strategy through to implementation. Three examples of how we help firms get started in this area include, 1) mapping out the client lifecycle and showing how teams and technology need to interact, 2) assessing the client capabilities and designing the future state technology organisation, and 3) reviewing the business and technology partnership and providing recommendations to align their objectives.

If you would like to discuss more, please get in touch with us here.

About the Authors

Kevin O'Shaughnessy
Executive Director and Head of Digital & Agile - UK & Europe

Kevin is an Executive Director at Alpha and leads our Digital & Agile Transformation activity in UK & Europe. He has over 20 years’ experience of driving digital and client-centric transformation across the financial services sector and, in particular, in the wealth and asset management space. His experience covers the full range of digital topics from strategy to
execution which he has deployed with a range of asset managers supporting a mix of institutional, wholesale, retail and end-investor audiences.

Adam Starkey-Smith
Associate Director

Adam is a Associate Director at Alpha with over 10 years’ experience in the Financial Services sector. He has a broad range of skills and experience, including operating model design and implementation, agile transformations, project management and process improvement. He is aligned to Alpha's Client & Digital practice, and therefore works with Asset and Wealth Management clients across Marketing, Sales, Client Service and Product, whilst also having a strong interest in technology operating models.

Yvie Lewis

Yvie is a Manager in Alpha’s Asset and Wealth Management division, with over 4 years of experience working in Financial Services. Since joining Alpha, Yvie has worked predominantly within the Client & Digital practice, supporting and leading a range of strategy, target operating model design and digital transformation projects. Before joining Alpha, Yvie spent 2 years delivering large scale digital transformation and implementation programmes within the Global Banking sector.

Georgie Herr

Georgie is a Manager in Alpha's Denver office with multiple years' experience working with asset and wealth managers in vision & strategy definition, operating model design, implementations, and large-scale transformations. Since joining Alpha, Georgie has primarily supported the Client & Digital practice in projects across a broad spectrum of business capabilities, including CRM, Data Management, Business Intelligence, and Client Service.