Actionable Insights From APT's Financial Services Practice
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Evolution of the financial advisor: balancing autonomy and standardization

July 23rd, 2015 | Posted by Monica Wojciechowski in Financial Services

From front-end products such as online banking and mobile payments to back-end operations such as processing transactions, leading banks continue to seek centralized, automated solutions to maximize efficiency.

However, wealth management practices and operations remain significantly less centralized. There is still a lot of debate regarding the efficiencies that can be gained by streamlining financial advisor operations through corporate resources. Traditionally, financial advisors have been given tremendous autonomy in managing their client and prospect relationships. However, as the industry focuses on the mass affluent segment, and better data and analytics about customers and their advisors becomes available, many firms are exploring whether some activities would be more effectively led by the central corporate organization.

We’ve seen multiple examples of how this can play out, and in each instance it is clear that there is not a “one size fits all” solution to maximize ROI. For example, one large wealth management firm considered controlling client communications directly through corporate, instead of allowing financial advisors to filter and customize communications. By testing the change with a subset of advisors, they found that some customers responded to the change more positively than others. In particular, corporate communications increased sales of certain products (Fixed Income and Managed Assets) for certain customers (those with fewer products). With such actionable insights regarding customer response to different communication methods, the organization was then able to target rollout of the program to reps whose clients matched these particular characteristics.

As the wealth management industry continues to grow and it becomes increasingly important for the central organization to interact directly with customers (e.g. through mobile apps and online secure messages), companies will need to understand the incremental, long-term effects of changing advisor agency. Ultimately, wealth management firms can generate a lot of value from automating certain operations. However, true value will not come from pure centralization, but rather the adoption of a structured analytic process to efficiently determine where such centralization can drive the greatest impact.

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