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Why Customized Service Models Are Here to Stay

By Nicsa Admin posted 12-07-2022 09:49 AM

  

Companies like Amazon, Uber, and Airbnb have radically altered customer expectations — and in doing so, they've raised the bar for everyone. As a result, people now expect Amazon-like conveniences across all industries and areas of practice, including financial services. Members of Nicsa explored this phenomenon at their 2022 General Membership Meeting

 

A recent Cerulli survey was examined, including responses from approximately 10,000 affluent investors. Respondents ranked the following characteristics as extremely important in an advisor:

 

  • Takes time to understand your needs, goals, and risk tolerance (51%)
  • Looks at your entire financial picture (investments, insurance, credit, etc. (45%)
  • Proposes solutions customized to your needs and goals (41%)

 

"Through all these factors, clients are voicing a need for customization," said Scott Smith, Director of Advice Relationships at Cerulli Associates, during Nicsa's event. Smith moderated the session, which focused on providing customized service across the client journey and featured thought leaders from Allspring Global Investments, Fidelity Investments, and MFS Investment Management.

 

Katie D'Angelo, Managing Director, Head of Wealth & Investment Management Partnerships at Allspring Global Investments, said the goal at her firm is to implement customization at scale.

 

That's why, in 2021, Allspring introduced Remi, an intelligent ecosystem offering robust capabilities for personalizing separately managed accounts (SMAs). Through a mix of investment insights and advanced technology, Remi provides clients with custom, tax-optimized portfolios.

 

"Remi means one who helps to guide or steer a ship. We love the notion of being that guide alongside our clients," D'Angelo said. "Ultimately, it's our job to tailor and deliver customized portfolios in a way that's easy to digest while driving the outcome they're looking for. "

 

Matthew Goulet, Head of Asset Management Services & Business Development at Fidelity Investments, said his focus is connecting asset managers to clients that are already on the firm's platform. "Increasingly, we're seeing that the conversation is no longer about, for example, getting a mutual fund CUSIP on the platform,” Goulet said. “Now, it’s often about tech integrations that support SMA businesses. "

 

Justin Hansen, Managing Director, Global Strategic Accounts, Retail SMA at MFS Investment Management, said his firm is taking a different approach. "We're not necessarily investing in the technology directly, but expanding the number of SMAs and other types of wrappers," he said.

 

Defining Success

The panelists also shared their definitions of success in terms of customizations.

 

"For us, it's pretty basic: We're very focused on market share," D'Angelo said. "It's a scale game; it's not about getting to 200 or 500 million — or even a billion. When we think about our industry, the largest of the large continue to thrive.”

 

"If you're niche and bespoke, you have a defined place to play, but being in the middle is getting harder and harder and harder," she continued. "We're about a $600 billion asset manager today – we need to be a trillion-dollar asset manager in the near future."

 

Noting that the asset management industry is notorious for over-complication, Hansen said he correlates success with simplicity. "If we listened to everyone’s input over the years, we'd have 900 share classes of every fund, and the reality is, we probably only need one," Hansen said. " I think simplification is success — for example, making it possible for clients like my mother to understand what they own. We just don't do that; I think it's an opportunity.”

 

Common Challenges

Goulet said that the biggest challenge in this space is time.

 

"Big firms like Fidelity have processes around customization, and these things take time," he said. "There are a lot of venture capital-backed fintech tools that create a buzz, but from my conversations with them, there's very little understanding of what it actually takes to go live and actually fund accounts on our platform."

 

D'Angelo pointed to tech adoption as a significant challenge when offering customization capabilities.

 

"Launching a portal doesn't mean that every broker-dealer is going to allow their advisors to get to that portal on day one," she said. 'There are big challenges anytime you're doing something new, which comes down to change management."

For a full replay of this session, employees of registered firms can visit Nicsa’s 2022 General Membership Meeting website. 

 

May contain forward-looking statements subject to various uncertainties. Personal views and observations of individuals contained herein are as of the date of the live event or written material and do not necessarily reflect the views of Nicsa or its member organizations. Nothing herein is intended to be or should be construed as legal advice. Contact your own counsel in order to obtain legal advice regarding these or any other matters. The information contained herein is for informational purposes only and does not constitute a recommendation of best practices.

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