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Achieving the goal of total wealth planning

Wealthy individuals want digitally enabled, personalised advice on their future life goals and wealth protection needs

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Wealth managers need to embrace the digital revolution as an ally, and not fight it as an enemy, to make a compelling case for its continued relevance.

SINGAPORE’S growing number of millionaires are increasingly looking to their wealth advisers for personalised advice on wealth preservation. In their pursuit of a share of this fast-growing market, wealth advisers who are most able to make use of digital tools to service their clients will have a decisive edge. 

More so than ever, today’s wealthy individuals have numerous paths that take them to different parts of the world to pursue education, careers, business opportunities and lifestyles. 

They will grow their wealth, retire, and eventually pass on their legacy, distributing their assets across multiple jurisdictions. Such transnational lifestyles have brought about greater complexity in their financial planning needs. Liquidating illiquid passion investment, procuring cross-border insurance coverage, repatriating business returns, compliance with foreign tax rules – these are examples of the financial services that are becoming more commonplace for the globally mobile wealthy individuals. 

To provide peace of mind as they move from one stage in life to another, advisers must help their clients navigate the risks and impact of their changing circumstances and life goals, and support them with the right wealth planning and preservation strategies.

Moving from product-centric to client-centric 

Many wealth managers are still aspiring to be that friendly trusted adviser who takes time to understand the client’s life goals, family needs and future plans, relying on their relationship management skills to keep their client base loyal. To be sure, these are essential attributes for every aspiring wealth adviser. 

However, they are no longer sufficient. The more traditional wealth adviser would be able to profile their clients fairly quickly and put together an array of product offerings for their consideration. At best, rudimentary analytical tools and limited data inputs were used in their evaluation. However, such a sales-driven approach can be myopic and curtail a wealth management firm’s potential to develop a long-term relationship with the client and truly maximise value for the client. Being client-centric is the harder path because this requires clients to change their behaviour to disclose more private and confidential information and mandates individual relationship managers (RMs) to capture the information for the wider firm.

A recent study by PwC of high net worth individuals (HNWIs) indicated that more than 40 per cent of the respondents trust their advisers enough to share such broader information with wealth managers, especially if they can be convinced that the data can be put to good use to help the wealth manager design solutions across a wider product universe to better align with their life goals.

Given that only around a third of HNWIs are confident about reaching their life goals, this wider-ranging guidance is likely to resonate with many. This is an opportunity for wealth managers. As this progresses, we should naturally arrive at a relationship-first, banking-second approach. 

Expectations of digital wealth planning 

Many clients in Asia like to touch and feel their investments and do some of their own simple modelling to make decisions on the portfolio themselves. Platforms have already emerged, where users can visualise key financials (income, costs, assets and liabilities) by plotting them against key life milestones and goals. Non-bankable assets such as real-estate, art, vintage cars, can also be added to create a 360-degree view of total wealth. 

Solution vendors are racing to enrich these tools with big data analytics, overlay the data with economic indicators such as interest rates, inflation rates, market price feeds, property indices, and applicable tax legislations, allowing real-time visualisation of the portfolio value under various scenarios. How will an investment decision impact the portfolio? How much debt should one take on? Clients now expect to have all these answers modelled with reasonable rigour. 

Clients are now more able and more inclined to self-serve between meetings with their advisers. They can simulate their portfolio and visualise the impact of hypothetical decisions on their wealth. During periodic reviews, advisers have to value add by providing even deeper insights than before. 

To this end, advisers must harness the power of data analytics to the fullest.Advisers can examine near-future potential decisions and changes, and advise clients on cost efficiency, trade-offs against alternatives, and impacts to longer term goals. This is the future of total wealth planning. Clients are willing to pay for it, and advisers must step up their game to stay relevant. 

Advisers can also exploit their unique position – having visibility of their client’s total wealth and life goals – to provide a full-service platform by positioning themselves as the client’s nexus with banks, insurers, tax advisers, lawyers, immigration specialists, art auction houses, relocation service firms, and other specialists. 

By expanding beyond the narrow ambit of financial advice, wealth advisers can over time make themselves indispensable partners to achieving not just their client’s financial goals, but their life goals as well. Over time, this full service platform serves to build more trust and satisfaction with each client and this translates to more sustainable and loyal relationships.

Fight is far from over 

Would the digitally savvy younger generations necessarily favour robo-advisors over the human touch provided by the traditional advisory model? Some probably would. But the fight is far from over for traditional wealth managers, especially those flying the flag of a trusted brand. The human touch will remain a vital element for many clients. Wealth managers need to embrace the digital revolution as an ally, and not fight it as an enemy, to make a compelling case for its continued relevance. 

Only by doing so would they be able to innovate and offer their clients a broader wealth management proposition that goes beyond financial planning, and that extends into wealth and life goal protection. W

In this piece, we deem wealthy individuals to be those holding liquid financial assets of US$1million and above.

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