In the current climate, our daily routines look very different. We have all had to adjust to new ways of shopping, working and managing family life. For those with investment portfolios times are uncertain, and those of us working in investment or wealth management have many challenges to consider.
We spoke to Nucoro COO Nikolai Hack about how to be there for your investment clients while dealing with challenges internally too.
How has Covid-19 disrupted the investment landscape?
The past weeks have involved both the quickest meltdown (-34% from Feb 19 to Mar 23) and the biggest three-day gain (+18% between Mar 24 and Mar 26) of the S&P 500 that most of us have witnessed in our lifetimes. On 18 of the 21 trading days between the end of February and March the index moved more than 2%. For perspective, the historical daily average is an up or down swing of 0.73%. It certainly was an interesting couple of weeks.
How has this impacted wealth management firms and their clients?
While the situation is definitely unnerving for investors, for unprepared firms in the space it can amount to a perfect storm. On the outside clients are concerned about their asset positions, the direction of the market and the ability of their provider to weather the storm. Internally, if your business as usual depends on people working in close contact with each other or their customers, many processes are heavily interrupted by the current constraints.
What can firms do to navigate this?
While times of distress are not the environment of choice to make technology decisions, many firms are having to do so out of necessity. Let’s look at some basic principles where technology can be deployed to calm the atmosphere both internally for staff and externally for clients.
1. Communication automation
If nailing client communication during normal times is the Premier League, keeping your customers informed when volatility spikes is the World Cup. Your clients need to hear from you – now more than ever. Even worse than a lack of proactive communication is a client not getting the information they need, trying to get in touch and then not getting a response because of a long backlog of requests.
The key element here is event driven communication automation. When clients log into their applications to check on their portfolio after a 5% downwards market turn, a reassuring reminder of their long-term investment strategy can prevent panic withdrawals. The same goes for updates of your availability for customer service or changes thereof.
Many people working from home now have to juggle the tasks of watching their kids while servicing clients, with both interrupting the other at times. Nobody will be put off by a message informing them upfront about possible wait and down times before they make a call – but they will be annoyed about an unaddressed wait when kept on hold indefinitely. Well placed messaging in-app or via email can ease tension and preserve trust.
2. Information accessibility
Another key aspect of minimising stress is transparency. This is what clients pay for during ‘business as usual’, so during turmoil failing to demonstrate this value can be a lethal blow to the relationship.
An effective way to retain transparency is to have a visualisation of your portfolio management activity front and centre of the user interface. It’s important this achieves the right balance between informing and overwhelming – but for sophisticated audiences, things might be as detailed as visualising every single transaction within multiple portfolios.
Through natural language generation, even algorithmically generated trading decisions can be enhanced with explanatory text snippets based on financial market data. In combination, this creates a highly personal and tailored experience that is at the same time also highly scalable. As these changes are proactively pushed to the user through app notifications or email alerts, firms can demonstrate their added value to clients before it is being questioned.
3. Self serve
What’s even better than great client communication and disseminating information effectively? Clients who don’t feel they need to get in touch or be informed in the first place.
As humans, feeling in control brings empowerment and elevation – so giving customers the ability to serve themselves within your proposition should always be paramount. Especially as extreme situations might make your staff unable to deal with otherwise mundane tasks, empowering your customers can become crucial to the survival of your business operations.
How can we ensure clients feel truly empowered?
Simple measures like a well-documented and easily adaptable FAQ library are among the more obvious elements here. Research continuously shows that a customer finding an answer themselves is happier than a customer trying to look for knowledge, not finding it and then being told about it. After all, successfully mastering a challenge is one of our most deeply ingrained cognitive reward mechanisms.
Finally, in the context of investment and wealth management, levers that clients can use to directly affect their investment outcomes are an even more powerful tool. Especially in discretionary investment management, it is entirely permissible to give your clients access to controls over the asset allocation and their portfolio risk levels. As long as limits are set to how much a user can affect the outcome of your methodology, this is a chance to give the user an extreme sense of accomplishment.
This all makes human interaction if not unnecessary, then at least an outlier. It doesn’t just shift workload to the client, but gives customers an appropriate amount of control over their financial affairs.
Will it ever be the right time to introduce new tech solutions?
With streamlined operations, empowering tools and the ability to proactively communicate, wealth management businesses can ensure clients feel supported and leave a lasting impression, further building trust that will last long after the crisis.
While in the current climate many of the aspects I have mentioned will be outside the realm of possibility for a number of firms, transformation projects like these will be key to future proofing your business. Now is the time to take stock of what you have and understand how you can improve your customer experience in the future.
To learn more about this, you can get in touch with Nucoro at firstname.lastname@example.org and schedule a discovery workshop.