Challenges of Client Onboarding in Wealth Management

in Financial Services, 31.10.2014

Many of the largest wealth managers are currently investing a lot of money into their onboarding processes. Besides wanting to avoid regulatory issues in the future, they also see the onboarding process as an instrument to streamline front-to-back processes and therefore to save costs.

Full compliance is key

In today’s regulatory environment, the flexibility to keep up with changes in compliance requirements is key. It is fair to say that this is one of the biggest challenges facing most – if not all – wealth managers. To ensure that future business success is built on full compliance within defined regulatory requirements, they will need to centralize their regulatory competences and enrich them with strong business, risk and IT knowledge. The IT infrastructure needs to be layered in a way that new regulatory developments and associated business change requirements can be implemented with minimal business disruptions and costs.

Small to mid-size organizations are advised to collaborate with globally operating Consulting and Technology firms that have the necessary depth (i.e. resources and knowledge) to maintain global regulatory coverage over time.

Turning regulation into added value

I’m convinced that financial service providers will be able to generate additional revenue from their compliance activities. The synergy potential is immense if wealth managers understand what regulators want to achieve when issuing legislative texts. For example, if a Client Relationship Manager – with the help of technology – focuses on understanding what his clients really need and how they’re best served, regulatory compliance will follow almost by default. Compliance can also help increase the quality of services, for instance, when reviewing whether wealth managers truly meet their fiduciary responsibilities. Keeping an expanded horizon in this respect can also help mitigate the inherent conduct risk, an area of high reputational risk for wealth managers.

Capturing of client data is crucial

Today, gathering KYC (know your client) data and suitability and risk profiles are part of the onboarding process for many firms. Besides supporting the approach of a holistic financial advice, I believe that collecting as much client data as possible at the point of sale will be crucial for the future success of wealth managers. It is a pre-requisite to

  • demonstrate regulatory compliance;
  • to enable timely development and distribution of innovative products and services;
  • to adapt innovative pricing methods and
  • to do all of this cost efficiently.

In order to achieve all of this, one requires highly trained Client Relationship Managers supported by integrated on-demand technology at the point of sale.



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