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Redefining the Financial Advisor

Welcome to the latest edition of Maveric’s Banking E.D.G.E. newsletter, where we translate complex industry trends into actionable insights for banking innovation. As we navigate through 2024, the financial advisory landscape is profoundly transforming.

Here is a quick roundup of six pivotal trends reshaping the industry and how forward-thinking advisors can leverage these changes to deliver unparalleled value to their clients.

1.) The Digital Revolution in Client Acquisition

The traditional lead generation playbook is experiencing a seismic shift. Financial advisors are now at the forefront of a digital revolution, leveraging sophisticated social media advertising and virtual sales processes.

Actionable Takeaways:

Develop a robust social media strategy focusing on platforms where your target clients are most active.
Invest in virtual meeting tools and create engaging online content to attract and retain clients.

2.) Mastering Economic Turbulence

Financial advisors’ role as trusted guides has never been more critical in an era of unprecedented economic volatility.

Actionable Takeaway:

Implement regular, personalized communication strategies to keep clients informed and reassured.
Develop and showcase your expertise navigating volatile markets through webinars, newsletters, or one-on-one sessions.

3.) The AI-Powered Advisory Revolution

Artificial Intelligence is rewriting the rules of financial advisory, from predictive analytics to hyper-personalized investment recommendations.

Actionable Takeaway:

Explore AI-powered tools that can enhance your decision-making process and improve efficiency.
Consider partnering with fintech companies to integrate AI solutions into your practice.

4.) The Financial Literacy Imperative

Financial literacy has evolved from a nice-to-have to a must-have in the fintech era.

Actionable Takeaway:

Develop a comprehensive financial education program for your clients, including workshops, online resources, and personalized coaching sessions.
Use gamification or interactive tools to make financial learning more engaging and accessible.

5.) The Rise of Sustainable and Ethical Investing

Sustainability has become a central pillar of modern investing strategies.

Actionable Takeaway:

Gain expertise in ESG investing through certifications or specialized training.
Develop a framework for integrating ESG criteria into your portfolio construction process.

6.) Navigating the Regulatory Maze

The regulatory landscape is evolving quickly, presenting challenges and opportunities for agile advisors.

Actionable Takeaway:

Implement a robust compliance management system to stay ahead of regulatory changes.
Consider partnering with legal experts or compliance consultants to ensure your practice remains compliant.

Charting the Course for Future Success

The financial advisory industry in 2024 stands at the cusp of a new era defined by innovation, adaptability, and client-centricity. Visionary advisors can thrive in this dynamic environment by embracing cutting-edge technologies, prioritizing client education, and navigating economic and regulatory shifts skillfully.

Citations and Further Reading

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Transform Your Banking Strategy with Optimizing Client Retention: Digital Marketing Blueprint for Banks.

In today’s rapidly evolving banking industry, staying ahead requires more than just traditional strategies. In the latest report by Maveric Systems, titled: Optimizing Client Retention: Digital Marketing Blueprint for Banks. is your definitive guide to mastering client retention and expansion. This report offers actionable digital marketing insights and strategic frameworks tailored for retail, corporate, and wealth management sectors, helping you achieve sustainable growth and maintain a competitive edge.

Unlock Critical Insights for 2024

Retention and Expansion Imperative: “Learn why focusing on customer retention and expansion is essential in today’s competitive market and how digital marketing serves as a strategic tool to achieve these goals.”
Optimized Digital Marketing Frameworks: “Implement sector-specific frameworks to optimize your digital marketing mix and budget allocation for maximum impact.”
Performance Tracking and Success Metrics: “Adopt a comprehensive approach to track performance and measure success, ensuring your strategies deliver tangible business results.”

Leverage the insights from Maveric’s latest CX report titled: Optimizing Client Retention: Digital Marketing Blueprint for Banks to enhance customer engagement and drive sustainable growth.

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Revolutionizing Banking CX: Actionable Intel for Corporate, Retail, Wealth banking leaders

In today’s rapidly transforming banking industry, staying ahead requires more than just traditional strategies. Maveric’s Banking EDGE CX Report’ emerges as a crucial guide for business leaders navigating an ever-dynamic business and consumer behavior landscape. It illuminates the latest developments and successful approaches in customer experience, emphasizing why an informed, adaptable strategy is vital for thriving in the Corporate, Retail, and Wealth Management sectors. This report is thus an essential reading for banking executives looking to align with current trends, innovate, and maintain a competitive edge in a dynamic global market.

Why Read the Report:

In-Depth Market Analysis: Comprehensive analysis of CX in banking sectors across North American, UK, European markets; focusing on digital adoption, fintech impact, politico-regulatory environment, and socio-economic factors
Sector-Specific Trends: Insights into Corporate, Retail, Wealth Management banking – their unique challenges and emerging trends.
Strategic Competitive Edge: Guidance on enhancing customer satisfaction, loyalty, and revenue through innovative CX strategies backed by several success stories and relevant case studies

Value for Business Leaders:

Data-Driven Decision-Making: Leverage the latest research and market data for strategizing and actioning CX
Technological Innovations: Explore how AI, Blockchain, data analytics, BI and other CX Tech/ Platforms are transforming customer interactions and operations.

Embrace the future of banking with strategic and actionable insights from Maveric’s Banking EDGE CX Report – your key to navigating and excelling in a rapidly evolving industry!

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ESG & Alternative Assets – Impact on Wealth Management Investment Strategy

Changing Business Environment

Economic headwinds in the US, UK, and EU – high interest rates and liquidity tightening – have impacted the wealth management (WM) industry. After years of sustained growth, global AUM saw its first decline (10%) in 2022, driven by falling markets. New business flows, and average Client Business Volumes (CBV) also declined in 2022.

This decline coincides with a surge in US investor preference for passive investments, further eroding the fee-based income. WM firms are eyeing diversification into new offerings with better margins to counter shrinking growth and profitability. This strategy aligns with evolving customer demand for newer asset classes, such as ESG-compliant investing and alternative assets.

Diversification Into New Asset Classes

ESG-Compliant Investment: Driven by rising social consciousness and the potential for regulatory risks with non-compliant businesses, Environmental, Social, and Governance (ESG) compliant investing is emerging asn a key priority for investors. Significant advances in energy transition to clean energy sources have also opened new avenues for profitable investment.
Research reports indicate that institutional investors plan to significantly increase their ESG holdings, with global ESG investing set to exceed US $53 trillion by 2025. Two-thirds of HNW investors consider ESG scores before making investment decisions. require specialized platforms for launching ESG related products & offerings and keeping track of ESG investments. They also need to acquire capabilities for ESG investment opportunities related data collection, analysis, identifying investment opportunities, risk measurement & tracking in terms of ESG performance, and regulatory & client reporting.
Alternative Assets: assets like Private Equity, Private Credit, Private Real Estate, and Digital assets like Cryptocurrencies, NFTs, and Tokenized Passion assets (Art, Wine, Nature) etc. – are emerging as a preferred investment option to Ultra High Net worth & High Net Worth investors seeking diversification. While carrying high risks, they provide significantly higher returns for investors with deep pockets & a higher risk appetite. Globally, alternative assets now account for over a fifth of total AUM, contributing half of the industry’s revenues.
Within Alternative Assets, Private equity has been popular following the recent liquidity-driven repricing and valuation corrections. While digital assets like cryptocurrencies remain volatile, interest in safer tokenized real-world assets (RWAs) is growing.

Alternative assets are inherently complex—liquidity, regulation, and pricing create unique challenges for WM firms. They’ll need specialized advisor talent and the technological infrastructure to manage this asset class and address client expectations effectively.

Acquiring ESG & Alternate Assets Investing Capabilities

While diversification into these new asset classes through organic growth is an option, considering the specialized talent and technology platforms required to advise on & manage these asset classes, and time to market, WMs are looking at Mergers & Acquisitions (M&A) as a serious alternative. Both in the US & Europe there is increasing interest in acquiring additional capabilities, customers & markets through M&A. M&A activity surged in 2021-2022 in both the US and Europe as firms targeted the capabilities, clients, and markets to accelerate their diversification.

Some Examples include:

investment capabilities presents an opportunity to WM firms to grow their business & also avenues for increasing fee income.

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What systematic risks are regulators now observing?

Regulators have faced heightened risk to the stability of the financial market and a loss of confidence in the banking system in the first half of 2023 after the collapse of multiple Financial institutions. While regulators globally are increasing efforts to assess financial stability via the liquidity and capital adequacy levels of Financial institutions, which was on expected lines, we have also observed a robust regulatory focus on the non-financial risk profile of individual institutions.

Growing complexity, scale, and plausible system-wide impact of non-financial risks gain regulatory attention on Financial institutions and the supply chain.

The increased reliance on technology and interconnectedness with third parties and technology partners in the new financial ecosystem has meant that the non-financial risk profile of individual institutions has changed multifold in terms of its scale and complexity.

Non-financial risk is increasingly being viewed as a potential threat to pose a systematic risk to the operational resilience of the financial system itself. Solid and coordinated supervision efforts are observed right from consultation, rulemaking, standard setting, and enforcement across legislations especially in Europe.

We observe new regulations covering information and communications technology (ICT) risk management, third-party risk management strategy, scenario planning, operational resilience, and technology governance. New regulations and wider remit of regulators cover information and communications technology (ICT) risk management, third-party risk management strategy, scenario planning, operational resilience, and technology governance. Crucially, these regulations will have an enterprise-wide impact and reach out to third-party suppliers.

Supervisory reports, industry consultations and surveys in both the US and Europe continue to highlight the potential impact of non-financial risks. Policy responses are also in line, providing standards, rules, and guidance.

Consistent risk management standards designed to avoid system-level disruptions

Newer emerging technologies, newer participants, and interconnectedness of various market participants mean that any operational resilience failure of individual organizations can quickly spread across the eco-system, thereby causing systematic risk. Therefore, it is not sufficient to assess and monitor the operational resilience of individual organizations; instead, regulators are now adopting a holistic system view of non-financial risks in the eco-system.

A detailed study of the new and proposed regulations highlights supervisors promoting consistency in risk management practices among Financial institutions via regulatory frameworks on technology governance, regulatory standards, toolkits, and guidelines.

The maturity profile of NFR Risk management usually differs significantly between Financial institutions. These common standards are expected to align NFR Risk management and reporting practices similar to financial risk management and reporting pathways.

This consistency is critical for efficient supervision while enhancing the industry’s ability to mitigate and recover from any system-level ICT-related disruption.

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Unlocking ROI: Mastering Hyper-Personalization in Wealth Management

With the rise of advanced analytics and digital capabilities, firms can now deliver real-time, personalized insights and meet clients’ increasing demand for tailored experiences. Hyper-personalization is thus a critical imperative in today’s competitive market, but its implementation is fraught with challenges – from understanding client personas to tech requirements and data privacy. Our unique, industry 1st, framework helps address these challenges and provides a roadmap for delivering impactful client experiences, whether through real-time personalization or product-persona-journey interventions.

Our Industry-First Framework Our framework is rooted in proprietary principles and a unique methodology, and is committed to revolutionize client experiences.
ROI Impact Our framework isn’t just about enhancing experiences; it’s about driving tangible business outcomes. For e.g.: A minor shift in metrics (1% point in open rate, 0.4% point in click rate) can lead to a significant increase in AUM (USD $1.14mn) within 6-8 months, showcasing the power of our approach.

In Conclusion In an industry marked by evolving client expectations, our framework emerges as a game-changer. It’s not just a tool; it’s a strategic intervention set to reshape the wealth management landscape.

Dive deeper into our framework and its transformative potential by listening to our Podcast on the same topic here.

Maveric’s thought leadership series – E.D.G.E (Experiences Delivered by Global Experts) – handpicks the game-changing technology ideas and pressing functional questions Banks and financial institutions must solve today.

These features – reports, whitepapers, podcasts, flyers, blogs, and infographics – are for Banking leaders and Technology evangelists to apply profound trends, the latest opinions, and transformational analyses to boost the performance of their organizations.

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