Future Financial Planning Megatrend No. 5: The Road Ahead—Driving Digital Transformation
“For the times they are a-changin’.” —Bob Dylan
Change is inevitable, especially in the variable financial planning, investment, and wealth management industries. Given this industry’s stricter regulatory environment, market volatility, widespread technological advancements, and savvier consumers, financial advisors who want to get ahead and stay ahead must quickly adapt to the changing environment. To get a head start and a leg up on the competition in this hypercompetitive, supersaturated financial planning industry, a successful financial advisor of the future will need to stay abreast of predictive advice and trend forecasting and implement adaptive changes accordingly. There are many trend forecasting reports that financial advisors should familiarize themselves with. One such report is Roubini ThoughtLab’s “Wealth and Asset Management 2021: Preparing for Transformative Change,” which was published in September 2016 and identifies five different megatrends predicted to change the wealth profession and financial planning industry over the next five years. Click here to read the report in its entirety.
- For a general introduction to the report and its five megatrends, read this Summit blog;
- For a more detailed discussion of the report’s first megatrend, “The Big Shift”, read this Summit blog;
- For a more detailed discussion of the report’s second megatrend, “The Rapidly Evolving Investor”, read this Summit blog;
- For a more detailed discussion of the report’s third megatrend, “Rethinking Product and Market Approaches”, read this Summit blog;
- For a more detailed discussion of the report’s fourth megatrend, “The Future Wealth Advisor”, read this Summit blog.
The instant blog will provide a more detailed discussion of the Roubini Wealth 2021 report’s fifth megatrend.
The Road Ahead—Driving Digital Transformation
The following are key takeaways from the “The Road Ahead—Driving Digital Transformation” portion of Roubini ThoughtLab’s “Wealth and Asset Management 2021: Preparing for Transformative Change” report:
The digital imperative:
- The Roubini report underscores the importance of providers going digital. After all, Roubini’s survey found that “82% said it was important for their investment provider to stay at the forefront of technology in the future” and “81% of those [investment providers] we surveyed told us that digital transformation is important for the future of their business.”
Digital tools in the offing:
- To keep up with the changing times, wealth service providers are developing a range of technology-based tools to help better serve the rapidly changing needs and demands of their customers.
- According to the Roubini report’s surveys, when it comes to technology-enabled tools for the future, the tools highest on the development list are: “anywhere, anytime, any device access to information and investment services” (as cited by 55% of survey respondents); “integrated customer experience across all channels” (48%); and “customized products and investment services” (48%).
Driving value through digital transformation:
- The Roubini report’s research “indicates that as wealth firms become more digitally advanced, value creation shifts from cost savings to business growth.”
- Digitization can help drive value in different ways. One way is through using technology-based tools to recruit new clients and reach a broader range of clients, which will boost revenues. Another way is to implement technological-based back- and mid-office processes that drive costs around the office down through increased automation and efficiency.
- It is of paramount importance to be able to maintain profit margins through digitization. As such, don’t just implement change for the sake of change.
Technologies to watch:
- The majority of wealth companies, even those that are currently considered digital leaders, need to improve on identifying emerging technologies.  The Roubini report says that the secret to this is staying vigilant and catching the trends early.
- According to the Roubini report, the most influential technologies to watch are the “fast-growing, smart technologies that can differentiate a customer’s experience and catapult some firms ahead of others in the digital race.” The results of the Roubini survey show several technologies that fall into this smart technology category including virtual reality (predicted to grow by 130% in the next 5 years), artificial intelligence (123%), web analytics and sentiment analysis (77%), telepresence and web collaboration tools (70%), and blockchain technologies (43)%.
The pace of digital transformation:
- The digital leaders in the Roubini survey are moving fast in order to reinvent themselves digitally and are already at the stage in the process where they have “defined leadership roles, acquired or developed the necessary talent, recast their strategic vision, brought IT and business units together, created a clear business case, and applied robust cybersecurity measures.” As the Roubini report says, “The majority of digital leaders are also, not surprisingly, already generating significant revenue and cost improvements.”
- The Roubini report identifies digital laggards as those in the bottom third of the firms surveyed who are in the earlier stages of their digital development. Roubini recommends that firms who fall into this category pick up the pace and do so now if they want to have any hope at catching up. Many digital laggards are significantly underestimating the pace of digital transformation.
Finding the right digital approach:
- Companies are using a variety of approaches for driving their digital initiatives and transformations. Most are developing digital systems, processes, and services internally, whereas a minority (albeit a substantial minority) use external experts or outsourcing.
- According to the Roubini survey, “nearly twice as many laggards [as compared to former digital leaders] outsource digital development work.” However, regardless of approach, the most important thing is to get active with your digital initiatives and transformation or you may very likely be relegated to playing an endless game of catchup.
Morphing into an omniprovider:
- According to the Roubini report, “The path to digital transformation is leading to one ultimate destination: becoming an ‘omniprovider’ – a wealth company able to serve customers seamlessly across all channels with a completely integrated front- and back-end.”
Going digital: calls to action:
- To better understand why some digital strategies succeed while others fail, Roubini analyzed the responses of surveyed digital leaders. Roubini’s research highlighted 10 critical success factors, which they then grouped together to create five pathways to successful digital transformation. These five pathways are as follows:
- Pathway 1: Develop a clear process for digital transformation
- Pathway 2: Make the customer the center of gravity
- Pathway 3: Aim to be a technology leader
- Pathway 4: Nurture a culture of innovation
- Pathway 5: Bring the right people on board
Here at the independent broker dealer firm of Summit Brokerage Services, we understand that it can be difficult for a financial advisor to be successful in this competitive and constantly changing financial planning industry. Summit can help you maximize your potential every step of the way—we take a consultant’s approach to working with our network of over 600 independent financial advisors and their offices, covering all aspects of their practices. For more information about Summit and to learn about becoming one of our independent financial advisors, visit www.joinsummit.com or contact us at (800) 354-5528.
About Summit Brokerage Services, Inc.
Summit Brokerage Services is part of Cetera Financial Group. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.
About Cetera Financial Group
Cetera Financial Group® (“Cetera”) is a leading network of independent retail broker-dealers empowering the delivery of objective financial planning advice to individuals, families and company retirement plans across the country through trusted financial advisors and financial institutions. Cetera is the second-largest independent financial advisor network in the nation by number of advisors, as well as a leading provider of retail services to the investment programs of banks and credit unions.
Through its multiple distinct firms, Cetera offers independent and institutions-based advisors the benefits of a large, established broker-dealer and registered investment adviser, while serving advisors and institutions in a way that is customized to their needs and aspirations. Advisor support resources offered through Cetera include award-winning wealth management and financial planning and advisory platforms, comprehensive broker-dealer and registered investment adviser services, practice management support and innovative technology. For more information, visit www.ceterafinancialgroup.com.
*”Cetera Financial Group” refers to the network of retail independent broker-dealers encompassing, among others, Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions, Cetera Financial Specialists, First Allied Securities, Girard Securities, The Legend Group and Summit Brokerage Services.
 To initially access the Roubini Wealth 2021 report, click here and then click on the green button that says, “Read the Report.” While the report is free to read, you must first enter your name and email address in the designated areas on the website in order to view the report.