The wealth management sector is a unique area of the financial industry. Like two merging streams, it can easily blur the lines of consumer and business banking, and mix it into a quickly moving entity that changes at every curve.
It has become even more unique, or at least a little more complex, when put under the light of the COVID-19 pandemic. Bringing with it an array of topics, it also inherently poses natural obstacles for consumers and advisors alike, especially when navigating the turbulent atmosphere produced by the most uncertain time of this generation.
Dissecting what happened during the infancy of the pandemic in the U.S., and what will become of the wealth management sector, BBVA USA Head of Global Wealth Hector Chacon recently unpacked his wide-ranging thoughts.
In this three part series, Chacon will touch on the market, the adaptation wealth management firms must undergo, consumer habits, and investments and financial planning, among other topics. The following is Part 1 - which focuses on the wealth management outlook from the perspective of wealth management bankers:
Flexibility and adaptability: The keys to clients’ financial health
CHACON: This pandemic continues to be a world-wide issue, and will remain as such for a long time. This crisis also changed the way we will live forever, in many ways. In terms of interacting with the clients, when this all started, wealth management firms needed to adapt quickly, especially in the area of advising and servicing clients face-to-face.
We needed to be prepared with digital tools to adjust to this. This completely changed the way we worked. Digital tools are even more important for the continuity of wealth management firms’ operations, and if anything, is going to accelerate the wealth management sector into the world of digital transformation.
We all realize we can do business remotely. That’s been something we’ve known. However, in the wealth management sector, face-to-face interactions with clients also adds value. So going forward, you’re probably going to start to see an increase in the hybrid model in terms of firms advising their client base.
If there is one thing that stood out to me during the pandemic, it’s the fact that our team of advisors and support staff adjusted and faced these challenges courageously. They were very well-prepared, and adapted very quickly to the situation to continue to provide a good customer experience. What made me most proud was that it was a smooth transition for both clients and our bankers. Of course, the work we did before the pandemic in the realm of digital transformation was key to this, as well. We’re still learning how to do better each day, but our team has gone above and beyond for our clients and each other. This reflects the fifth pillar in our 5-year strategic plan: the Best and Most Engaged Team. We have the ability to adapt because of our people, their commitment to their clients, and their impressive skill set.
Cybersecurity during the rise of digital transformation
CHACON: While we want to keep embracing digital transformation and the current acceleration of it, we also have to be wary of external threats and keep cybersecurity as a main part of this equation.
This is where being part of a global institution, among other benefits, comes in handy. We are under the BBVA umbrella - one that takes cybersecurity very seriously.
Our CEO Javier Rodriguez Soler has said this many times - but our 5-year strategic plan, even though it was introduced before the pandemic hit U.S. soil, has not changed. In fact, it’s more relevant than ever - especially when one of our six pillars guiding this plan is Operational Excellence. It is our responsibility to help customers get the best possible service in the most efficient and fastest way possible, yes. But we have to do it with proper risk management, governance, control, process and capital allocation.
But cybersecurity is a challenge that all financial organizations face in modern banking - not only because of the pandemic and the rising number of scams. Even beforehand, it was very important for our clients to trust us in this area. It’s something we have focused on in the past, and is even more table stakes for us in the future. It’s up to us, also, to communicate with our clients how we are protecting them and their financial health in this way.
The use of data and analytics
CHACON: I’ve honed in on this topic before, and for good reason. Another important aspect of the future of wealth management is data and analytics. Our interactions with clients need to be supported by data-driven, analytical approaches.
We need to use these tools of data and analytics to anticipate our clients’ needs. I’ve said this before, but the wealth management sector is one that sees a variety of clients, ones that do not need the same advice or solutions as the next. To increase convenience, in an increasingly inconvenient time due to COVID-19, we must tailor their needs as efficiently and safely as possible. Technology and remote capabilities are a key part of this, and we’re focusing on implementing end-to-end, seamless digital processes for our clients every day.
I’ve mentioned it before, but I have to say again: While we’re working toward the future and embracing this transformation, the hybrid model of face-to-face and digital is still very much a part of that future. We need to use data and analytics to keep evolving in that area.
Data and analytics are the future of wealth management advising. Make no mistake. However, this will not take away face-to-face assistance. In fact, it will enhance it. Using more advanced analytics is going to enhance our capabilities in helping our clients throughout the entirety of their financial journey.