Finding the holy grail of client onboarding in the wealth management space
At Dorsum we know how complicated it can be sometimes to fix a pain point on which a lot can depend, including the level of client satisfaction, the quality of user experience and the cost of client acquisition.
Client onboarding in wealth management is a complex issue, with many distinct aspects, perspectives, and expectations. A client, a CEO, and a CTO will approach it from various perspectives.
But mastering client onboarding is a necessary ingredient of success for Wealth Management firms or Financial Advisors nowadays. Onboarding and KYC requirements in Wealth Management are so extensive and rigorous that digital tools alone cannot completely speed up or simplify the onboarding process to the required extent. A more comprehensive solution & approach is needed here.
With years of experience behind us in building our own onboarding solution, we can help you cut the various pitfalls and challenges by applying Dorsum’s wealth management onboarding matrix. It is a simple concept: we use a 2×2 matrix to illustrate two aspects: how (1) digitalized, and how (2) assisted an onboarding process is.
How to use these two dimensions? On the first axis, we place clients according to where their preferences lie in between a fully paper-based or a fully online onboarding process. The second axis shows the amount of assistance a given client desires during the whole process.
Let’s investigate some examples and continue by looking at the three key problems in onboarding today in the context of Dorsum’s wealth management onboarding matrix and take a look at how these issues may be solved by industry participants.
#1 A lack of alignment – bubbles can make you lose track of the client
Everyone speaks their own language today when it comes to onboarding. Clients wish for a quicker, more personal and user-friendly experience. The topic makes CEOs think of cost-efficiency. Meanwhile, CTOs focus on the applied technologies, and all the integrations.
It simply is not possible to turn onboarding into a competitive advantage when you are trapped in your bubble and forget to consider the actual needs of your customers. Which takes us to the second problem.
#2 Putting everyone in the same box – assuming homogeneous client preferences
During our conversations with wealth managers, we observed a tendency to assume that the client base is so homogeneous that the vast majority will have the same preference when it comes to onboarding. Let’s see what that looks like in the context of our onboarding matrix.
Many players assume, for instance, that just because many of their clients are older, 80-90% of them will prefer a fully paper-based process and constant assistance from their advisor.
Evidence suggests this is not the reality. Therefore, the solutions offered today do not reflect the real demands of customers, which consequently creates a reality gap and results in reduced client satisfaction and the wasting of valuable company resources.
#3 Putting everyone in one exact box – assuming onboarding journeys are set in stone
Often wealth managers correctly realize that they cannot put all their clients in the same box. What they often end up doing is creating client personas and putting all of them in one of two boxes that represent the extremes of client onboarding: they must either want a fully offline and assisted process, or a completely online one with no assistance at all.
Client personas are correctly used to model different preferences, but there is still an assumption that these clients would go through exactly the same client journey during a complex and lengthy onboarding process and that no movement will happen between the different boxes.
Although this approach somewhat reduces the reality gap, it is still not ideal. While it enables them to choose a user journey at the start, they are subsequently forced to stay on that given path no matter what happens. However, an onboarding process is so complex that we cannot assume that the preferences of the client will not change at all and that clients will want to take the exact same journey all along.
Imagine walking into a shoe store and being told that you can either buy an extra small or an extra large pair of shoes and those are your only options. That sounds surreal but it is how onboarding in wealth management often works these days.
Overall, making any of these three mistakes will create a reality gap where the employed strategy is in a strong dissonance with how reality looks like. But how do we close this reality gap?
The truth about client onboarding – unique client journey
In reality, all clients will want to move around the different squares of the matrix according to their own tailored client journey. In order to provide them with a high-quality user experience, you should allow them to do that. That way, you can fully eliminate the reality gap.
At certain points they may feel comfortable filling out some forms online without assistance as it feels straightforward to them. At that point it would be a mistake to force assistance on them as it will increase the amount of time they need to complete the task at hand. If they still get stuck later, your online channels need to be ready to provide them with the necessary help.
Later when it comes to defining their investment objectives and completing the suitability assessment, many will feel the need to receive in-person assistance from an advisor and be happy to walk into the physical location of the wealth manager. It would also be an error at this point to force them through an end-to-end digital journey and assume that the company is displaying outstanding innovative capabilities by doing so.
Offering freedom of choice and a tailored client journey is the key to success
We believe that first, wealth managers need to think in terms of the actual client journey. But it is not a good idea to try and define it altogether. Enable your customers to make their own decisions and forget about the eternal dilemma between online and offline once and for all.
What you need to do instead is create the opportunity for them to tailor the onboarding process to their needs at each point in the journey. You build the car that takes the clients to their destination, and they choose the route they want to take.
To summarize: the key to success is to understand how your clients move around the onboarding journey and to have a flexible system, and technology that can cater to all these journeys.
If you do so, you’ll close the reality gap and provide a tailored experience for your clients that will differentiate your business from competitors, increase your clients’ satisfaction and decrease the cost of client acquisition far below the industry average. And with our flexible digital onboarding solution you can achieve all this.
Interested in how Dorsum’s wealth management onboarding matrix works for you in action?
We are here to help you maximize its value for your company, so please, do not hesitate to contact us for more information if you are interested!
