Advisors’ new toolkit: Biometrics, risk algorithms and machine learning

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Personal relationships have always been the lifeblood of wealth management, but the pressure to intensify personalization has increased dramatically, according to Capgemini’s most recent World Wealth Report.

In fact, there is a “measurable correlation linking high-net-worth clients’ personal connection to their firm and advisor and the financial performance of firms,” according to the report.

Despite a dip in investment performance last year, 88% of wealthy clients in the U.S. and Canada with investable assets of $1 million or more said they still had faith in their advisors, Capgemini found.

"Personal connections are still the differentiating factor," says Chirag Thakral, an analyst with Capgemini.
What do wealth managers need to do to strengthen their ties to clients in the digital age?

Focus on hyperpersonalization, Capgemini urged advisors.

One private bank cited in the report said it leveraged risk algorithms to model each client’s risk-return profile so that solutions can be personalized according to a client’s specific needs.

BNP Paribas reported that it has developed a biometric recognition and unlocking system that leverages fingerprint, voice and facial recognition for wealth management clients.

The report also cited Morgan Stanley’s “next-best-action tool” that uses machine learning to analyze data to develop customized investment options for clients. The tool also gives recommendations to clients regarding non-financial issues such as health and education.

The challenge for wealth managers is to deliver personalization efficiently and at scale, the report states. While this can be achieved by using artificial intelligence and data analytics, wealth management firms have “yet to tap this opportunity fully,” according to Capgemini.

Fintech firms are trying to exploit this lag, the report warns. But wealth managers can gain a competitive advantage by using to hyperpersonalization to “redefine the client experience,” the report asserted.

Additional reporting by Graison Dangor

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High net worth Client relations Client retention Client communications RIAs Artificial intelligence Machine learning Capgemini Morgan Stanley Wealth Management