COVID-19 pandemic has brought a significant change in the way financial advisors manage their practices, clients and home office communication. Along with the data driven client servicing platforms, smooth transition and good compensation, advisors are closely evaluating their firm’s digital quotient to provide them the service and support in times of such crisis and if not satisfied, may look out options of switching affiliation during or post this crisis.

This pandemic is not a trigger rather has provided additional reasons for advisors to continue to look out for a firm that fits better in their pursuit of growth and better client service.

2018 Fidelity Advisor Movement Study says, 56% of advisors have either switched or considered switching from their existing firms over the last 5 years. publishes that one fifth of the advisors are at the age of 65 or above and in total around 40% of the advisor may retire over the next decade.


A Cerulli report anticipates transition of almost $70 trillion from baby boomers to Gen X, Gen Y and charity, over the next 25 years. Soon, the reduction in the advisor workforce will create a big advice gap, that the wealth management firms will have to bridge by acquiring and retaining the right set of Advisors


We are observing a changing landscape of advisor and client population, mounting cost pressure due to zero commission fee and the need for scalable operations. COVID-19 has further accentuated the need for the firms to better understand the causal factors for changes in advisor affiliation, to optimize their resources deployed for engaging through the Advisor life cycle. The wealth management firms are increasingly realising that a one fit for all solution may not get optimal returns for them.

Data and Analytics can help the firms segment their advisors better and drive better results throughout the advisor life cycle. Advisor Personalization, using specific data attributes can deliver contextual and targeted engagements and can significantly improve results by dynamically curating contextual & personalized experiences through the advisor life cycle.

A good data driven advisor engagement framework defines and measures key KPIs for each stage of the advisor lifecycle and not only provides insights on key business metrics but also addresses the So What question about those insights. As wealth management firms collect and aggregate data from multiple sources, they are also increasingly using AI/ML based models to further refine advisor servicing.

Let us look at the key goals or business metrics for each stage of the advisor life cycle below and see how data and analytics driven approach helps in each stage of the life cycle.


Prospecting & Acquisition

To attract and convert more high producing advisors, recruitment teams should be tracking key parameters through the prospecting journey of the advisors so that they can identify:

  • What is the source of most of their prospective advisors; RIA, wirehouses, other BDs
  • Which competitors are consistently attracting high producing advisor
  • What % of advisors drop from one funnel stage to another and finally affiliate with the firm
  • What are the common patterns and characteristics in the recruited advisors

Data driven advisor recruitment process that relies on the feedback loop helps in the early identification of potential converts, thereby balancing the effort spent on recruited vs lost advisors. It also improves the amount and quality of the recruited assets.

For example, analysis of one-year recruitment data of a large wealth management firm revealed that prospects dealing with variable insurance did not eventually join the firm due to the firm’s  restricted approved product list. Another insight revealed that prospects with a higher proportion of fee revenue vs the brokerage revenue increased their GDC and AUM at a much faster rate after one year of affiliation. Our Machine Learning Lead Scoring Model used multiple such parameters and scored a recruit’s joining probability and 1-year relationship value to help the firm in precision targeting of high value advisors.  These insights allowed the firm to narrow down their target segment of advisors and improved conversion of high value advisors.

Growth & Expansion

A lot of focus during the growth phase of the advisor lifecycle is on tracking business metrics such as TTM GDC, AUM growth, commissions vs Fee splits. The above metrics however have now become table stakes and the advisors expect their firms to provide more meaningful insights and recommendations to improve their practices. Some of the ways, firms are using data to enhance advisor practice are by:

  • Using data from data aggregators and providing insights on advisor’s wallet share and potential investment opportunities
  • Providing peer performance comparisons to the advisors
  • Providing next best action recommendations based on the advisor and client activities

For example, our Recommendation Engine analysed advisor portfolio and trading patterns and determined that most of the high performing advisors showed similar patterns in Investment distribution, asset concentration, churning %. This enabled the engine to provide targeted investment recommendations for the other advisors based on their current investment basket and client risk profile. The wealth management firms are also using advisor segmentation and personalization models based on their clients, Investment patterns, performance, digital engagement, content preference and sending personalized marketing and research content for the advisors based on their personas thus driving better engagement.

Maturity and Retention

It is always more difficult and costly to acquire new advisors as compared to growing with the existing advisor base. The firms pay extra attention to ensure that their top producer’s needs are always met. Yet despite their best efforts, large offices leave their current firms for greener pastures or higher pay-outs. The firms run periodic NPS surveys with their advisor population which indicates overall satisfaction levels of the advisors, but they do not generate any insights for proactive attrition prevention. Data and analytics can help you identify patterns to predict advisor disengagement and do targeted proactive interventions.

For example, our attrition analysis study for a leading wealth manager indicated that a large portion of advisors over the age of 60 were leaving the firm and selling out their business. This enabled the firm to proactively target succession planning programs at this age demographic of advisors. Our analysis also indicated a clear pattern of decreased engagement with the firm’s digital properties and decreasing mail open rate, for the advisors leaving the firm. Based on factors such as age, length of association with the firm, digital engagement trends, outlier detection, our ML based Attrition Propensity model created attrition risk scores for advisors and enabled retention teams to proactively engage more with at-risk advisors and improve retention.

As per a study from JD Power, wealth management firms have been making huge investments in new advisor workstation technologies designed to aggregate market data, client information, account servicing tools and AI-powered analytics into a single interface. While the firms are investing heavily in technology, only 48% advisors find the technology their firm is currently using, to be valuable. While only 9% of advisors are using AI tools, the advisor satisfaction is 95 points higher on a 1000-point scale when they use AI tools. Advisors find a disconnect between the technology and the value derived from the technology.

This further necessitates the need for personalised solutions for advisors and an AI driven Advisor personalisation platform which provides curated insights to the firms. This helps in targeted & personalized services & support to advisors through the Advisor lifecycle, enabling optimal utilization of the firm’s resources and unlocking huge growth potential.

The firms that will understand the potential of data driven decision making for their advisor engagement and will start early adoption of such tools will thrive in these uncertain times and will emerge as a winner once the dust settles.

Digital Transformation was one of the most important business trends across the wealth management circles before the unprecedented global disruption shifted all the focus towards ensuring business continuity.  Recognizing the changing digital behavior, leading RIA custodians, broker dealers, TAMPS, RIAs had either embarked or were kickstarting their digital transformation journeys. The disruption caused by COVID 19 has clearly laid bare the nascent stages of digital evolution for the many wealth management players. The customer service centers are overwhelmed with increased call volumes and reduced capacities. Similarly, financial advisors are required to field multiple long calls from anxious clients who are uncertain about their investments. Low adoption of digital assets provided by broker dealers and RIAs firms may be a result of sub optimal CX or gaps in information availability. We all may be in a long period of disruption, and the firms that are not able to drive digital adoption, or continuing to remain person dependent will realize the difficulty in client servicing, let alone operational scaling.  Digitalization needs to be looked at as an essential part of the wealth manager’s business continuity efforts as it ensures information availability and provides online self-service capabilities. Digital Insulation is another complementary term that offers an ambitious glimpse of future possibilities.  To protect their businesses from personnel-related disruptions, organizations will need to invest digitalization and thus ensure business continuity.

Drivers of Digital Transformation

Digitalization in the wealth management was primarily driven by the following drivers:

Drivers of Digital Transformation

  1. Changing business model– The business model has been steadily shifting away from a product focused brokerage model to a relationship focused advisory model. In a study conducted by , the consolidated commissions revenues for the top 50 Independent broker dealers have reduced in the last 5 years, while the advisory fee has increased by more than 50% in the same period. Shifting client base of advisory clients expect engagement across multiple channels and customer experience becomes paramount.
  2. Revenue compression– Zero commissions are already a reality and were a seminal event for the industry. Revenue impact for the players will range from anywhere between 10%- 20%. Also, RIA custodians are likely to levy additional fees on the participants to cover for the lost revenues. With the fed rates likely to remain low for the foreseeable future, the revenue stream from sweep accounts will also reduce substantially further, thus accentuating revenue pressures.
  3. Changing the age mix of client and advisors– As the wealth transfers from baby boomers to the millennials, the millennials will make up for an increasingly valuable client segment. Similarly, as the ageing advisor population retires, the new advisors will primarily be dependant on technology, largely influencing their business decisions.
  4. Fin Tech Disruption– Advisor Fintech tools, also known as Advisor tech, have not only invaded the usual favorites domains such as CRM, financial planning, and portfolio management but have created new advisor tech segments such as mind mapping, account aggregation, forms management, social media archiving etc. 2020 T3 advisor software survey covered almost 500 different tools across almost 30 sub segments highlighting the plethora of tools available for clients and advisors.

The above drivers are creating two main needs for the wealth management players:

Need to Scale Servicing. The first two drivers (changing business model and revenue compression) are forcing wealth management players to realize the need to digitalize and gain operational scale for servicing more clients. In a study conducted by, servicing clients was cited as the most important digital driver for the wealth management firms. The ongoing disruption will further fuel the demand for straight through client onboarding, E- account opening, digital signatures, and workflow-based proposal generation solutions. Moreover, the organizations that still depend on back office processors to open accounts and onboard clients will see an increased transition. Similarly, advisors and clients need to be provided with tools to move to a more self-service model.

Need to Scale Knowledge– The last two drivers (changing Age mix & FinTech Disruption) trends have resulted in increasing client and advisor expectations. An increasing number of clients no longer just delegate their investment decisions to advisors but also seek to collaborate and validate the investment decisions. They look for real time knowledge about their current investment and investment insights. With the prevailing uncertainty, many clients will also start demanding real time information about risk tolerance of their portfolios are and how they can quickly pivot to either protect their investments or to take advantage of any profitable bargains. The clients will naturally drift towards financial advisors who provide full-service client portals to access and monitor their investment. Similarly, advisors will drift towards firms which provide digital practice management tools and advisor self service capabilities.

The third form of scale which will become very relevant in the current disruption is Scaling digital collaboration. With Social distancing becoming the norm, in person client meetings may not be possible for some time. While advisors and clients can still talk and make video calls, current tools do not allow for collaborative discussion or presentations. Going forward, the organizations will need to invest in tools that enable online client engagement and advice delivery as a complimentary engagement channel. Software providers can study the evolution of telemedicine systems, which provide a full suite of features including video conferencing, document sharing, scheduling appointments, taking notes, as well as client history. Once client portals or CRM systems can be enhanced for Tele Advice, this alternate engagement channel is likely to grow in popularity with both clients and advisors, allowing remote collaboration and engagement.

To sum up, digitalization is the best antidote for any such future disruptions, which will be assisting wealth management firms in modernizing advice and accelerate their digitalization efforts to not only transform but to insulate their businesses. Digitalization can in fact become a vital cog of the business continuity efforts by enabling self-service, information disintermediation and collaboration.

Over the past two months, COVID-19 has not only created a global health crisis but also led to socio economic disruption and affected major industry sectors, including healthcare, banking, insurance, capital markets and so on.

Wealth management is one of the vulnerable sectors with highly correlated revenues to capital market performance and has already started experiencing loss in revenue and growth. The stock market response to the COVID-19 pandemic has been panic driven and volatile and could continue to be so until the spread of the virus is contained. With the economic data likely to worsen in the coming months, stock markets could experience another round of correction.

As a result, firms have initially struggled and are now implementing plans to reduce costs, assess spending, with continued efforts to tackle extremely high trade volumes and keep critical processes running. Most firms have now dealt with the initial priorities to ensure large scale business continuity and set up the majority of the workforce to work remotely. These firms are now working to identify data and information security risks and reprioritize organization strategies and projects.

There are a few firms that are yielding benefits of prior investments in digital transformation, automation and infosec who are slightly ahead in the digital maturity curve while others are just starting out to plan and strategize their digital journey for  the near future.

From our experience, we believe there are four key themes shaping up during this crisis which will help wealth management firms stay resilient:

  1. Focus on cost reduction and rationalization: To tackle market volatility, there is an increased focus on optimizing costs and improving operational efficiency. With a growing volume of business transactions, deployment of tactical automation solutions to automate trade processing and compliance reporting will embed the much needed flexibility and improve productivity. Outsourcing additional processes for short to medium term will also help address the increase in workload without huge cost investments. On the technology front, leveraging cloud solutions would be a quick win to reduce fixed costs immediately.
  2. Prioritize risk and data security: Given millions of resources are working remotely, companies will have to revisit cybersecurity best practices and enhance/upgrade systems to protect from unauthorized access, phishing scams, etc. With unsecured channels and networks for remote employees, wealth management firms will also need to reassess access to applications depending on criticality due to the increasing threat of cybersecurity. Adoption of multi-factor authentication and enhancing security incident management protocols would be vital in maintaining data security.
  3. Continue to focus on Digital Transformation: Firms need to double down at their digital transformation practice to defend their core business and emerge as a winner in this new normal. Digital analytics is critical for companies to refine their portfolio strategy, help automate critical processes through usage patterns, strengthen market research and insights to better communicate with advisors, broker dealers and investors. The significance of omnichannel and well-designed advisor & investor portals could have never been higher. Simple and intuitive portals will help communicate account/portfolio performance and help stakeholders make data, transaction requests faster and understand how they are being impacted in real time. It’s critical to harness the data across the web, mobile, branches, CRM to make sure the best of the experience can be provided to clients and advisors.
  4. Enhance IT resiliency: Most firms were unprepared for a crisis of this magnitude, given its unprecedented nature. While on the one hand, businesses have managed to get their workforces set up remotely, it is critical that they continue to assess the impact of network traffic, volumes,  on the infrastructure. They should also prepare and update plans to address security breaches, network breakdowns, and critical resource unavailability in a proactive manner.

In spite of the downfalls, every crisis helps businesses realize their underlying strengths and helps them define their strategy roadmap for the next journey. We strongly believe that investments in operational efficiencies, digital transformation and customer experience optimization while continuing to work on data security and BCP will be the key pillars of running a resilient business during this crisis. They will continue to remain important in the ‘new normal’ that will emerge post the pandemic as well.

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