Agile Planning in Wealth Management Firms

Agile Planning in Wealth Management Firms

Author Mark Bodger ACMA, ICit

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The Wealth Management (WM) industry is going through a period of significant change. A new generation of investors, whose expectations and preferences have been shaped by new technologies and the experience of the last financial crisis, have brought new expectations to the industry in terms of how advice and investment products are being delivered.  These new investors will control an increasing share of retail assets over the foreseeable future. Furthermore, a challenging investment environment, characterised by increased levels of uncertainty and rising costs of risks to investors and Wealth Management firms alike, is making it harder for advisors to generate superior investment returns for their clients.

Five Key disruptors in the Wealth Management Industry today

There are many disruptive factors impacting Wealth Management firms today, each with a degree of influence and interdependence.  The five key factors are:

  1.  A new generation of tech savvy investors who think differently about advisory services and bring new attitudes and expectations to the Wealth Management industry.
  2. Big data and advanced analytics are transforming the Wealth Management industry providing new ways to engage with clients, manage relationships and risks.
  3. Retail investors are demanding access to the same asset classes and investment strategies as institutional investors.
  4. Increasing regulatory burdens and rising costs pose new challenges to Wealth Management firms business models.
  5. The Covid-19 pandemic has created an even more challenging macro environment for investors and their advisors to find the right risk/return portfolios.

For FP&A professionals working in the Wealth Management Industry, the ability to model the bottom-line impact of these disruptive factors is paramount. Fundamentally, the ability to attract and retain investors by offering a superior experience and a frictionless investment platform, may be the differentiator that will determine long term survival.  Investors demand strong performance and excellent customer service from their Wealth Management advisors.

At ICit we have worked with many Wealth Management firms who have adopted cloud-based enterprise planning solutions to help them rise to the challenges facing them.  For example, by using scenario planning to model a variety of business outcomes, multi-dimensional analysis to provide insights to business performance, and the ability to provide real time reporting, helps give them the edge that they need to remain competitive.
By adopting Workday Adaptive Planning enterprise planning software, our customers have dramatically improved efficiency, removed bottlenecks in planning processes and transformed their ability to provide decision support information to their stakeholders.

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Accelerate and streamline planning and budgeting cycles, from corporate to branch

Workday Adaptive Planning lets you extend a powerful planning and budgeting solution to branches, locations, and entities. For example, you can enable branches to report on metrics like asset mix and customer volume, then roll up and consolidate at the corporate level. The result is faster budgeting and reporting cycles, greater consistency, and less risk. More time to analyse and tell the story and less time spent number crunching spreadsheets.

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Driver-based planning, from fees to commissions

The smart way for Wealth Management firms to improve planning and forecasting is to adopt a driver-based approach. This includes forecasting revenue across a broad range of businesses and products, including asset management, brokerage, and fee-based services. Model revenue streams based on drivers like customer demand, shift in sentiment, multiple currencies, and direct expenses. You can easily update these driver-based plans and generate rolling forecasts that can be flexed with changing market conditions and business priorities.

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Self-service reporting and analysis

The FP&A team can provide the management team with self-service reporting using Workday Adaptive Planning. Managers can rapidly generate financial statements and management reports, and even perform stress testing so that they can manage risk and compliance processes more efficiently. Also, by using dashboards, managers can instantly see the status of operational and financial KPIs such as fee income, broker commissions, net revenue growth, expense and asset growth, and credit losses.

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Gain deeper visibility into costs and profitability

Ultimately, the challenge for Wealth Management firms is to provide the best customer service at the lowest possible cost. Workday Adaptive Planning delivers flexible reporting capabilities to help you gain deeper insights into profitability by product and service, so you can make better and more strategic decisions about service mix, customer wallet share, and business seasonality.

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“With Workday Adaptive Planning, we’re saving at least two days each month in FP&A work and can tell the story of what’s happening with the business across all dimensions much sooner than before.”
Jenny Quinn, VP of Finance and Controller, AGF

 

Summary

This is a time of significant change and disruption in the World and for the Wealth Management industry. New forms of advice and new investment platforms will continue to emerge, creating winners and losers across the industry. While retail investors will likely benefit from the changes provided by easier access to the market, Wealth Management firms must strategically evolve to retain their customers loyalty and investment.

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