Optimizing finance personalization: Making investor returns the sole key performance indicator
In a significant transformation, the wealth management industry is moving away from a product-centric approach and embracing a client-centric model. This shift, facilitated by technology, artificial intelligence (AI), and unified advisory services, aims to provide personalised, holistic financial guidance rather than fragmented product offerings.
One example of this change is firms like Cerity Partners, which focus on delivering comprehensive and coordinated financial advice covering investment management, retirement planning, tax, estate planning, and risk management in a unified, collaborative team environment. This contrasts with traditional wealth management firms where clients might face disconnected service providers, leading to fragmented advice.
Advanced use of AI enables wealth managers to build highly personalised portfolios by leveraging comprehensive client data, improving risk assessment, onboarding, and tailored product suitability. AI also automates back-office processes to reduce costs and improve margins while enhancing the quality of client advice and service. Companies like Objectway provide scalable, cloud-ready wealth management software solutions that support multi-channel engagement, efficient operations, and AI-powered client insights.
Russia is also advancing its financial infrastructure modernization, including piloting a digital ruble aimed at making digital currency use extensive among citizens and businesses. Such innovations could facilitate a more client-focused financial environment by improving transparency, efficiency, and access to financial services. However, Russia’s shift likely also involves navigating geopolitical and economic challenges, trade relations, and the need for cooperation with international partners.
The key challenges in creating a fair and efficient asset management system include balancing cost and personalisation, data privacy and security, regulatory and technological adaptation, integration and interoperability, and educating clients and advisors. It is essential to maintain fairness and efficiency through technological integration, regulatory adaptation, privacy safeguards, and client-advisor education.
The Russian regulator and banking sector are attempting to address the issue of imbalances in portfolios by providing access to information about different client assets through APIs, implementing the concept of "open banking." Over time, clients have demanded individualization and customization of financial solutions, leading to the emergence of multi-family offices, independent financial advisors, and investment clubs.
The solution is to transition to a fundamentally different model of working with investors, focusing on a comprehensive audit of the client's financial situation, building a personalised capital management strategy, and shifting the focus from "What needs to be sold?" to "What does the client want to achieve?" Long-term investments allocate up to 60% of funds to equities and bonds, and up to 40% to alternative investments. A wealth check includes risk profiling, asset mapping, and a complete inventory of property. Medium-term investments consist mainly of equities (around 60%) and bonds (40%).
An example of the benefits of this shift is a financial diagnosis for an entrepreneur whose company's revenue exceeded 1 billion rubles, but he had no personal savings, and each month he barely had enough money for current expenses. The wealth check showed that 100% of his funds were invested in the business and non-liquid real estate, he had no personal money, no safety cushion, and no liquid assets. Consequently, important changes were made to his financial life, including insurance for the whole family, creating a safety cushion, and setting a goal to accumulate $1 million in two years by investing a fixed monthly amount in a diversified portfolio.
In conclusion, the global wealth management industry is moving towards a client-centric model enabled by technology and AI, emphasising unified advice and service coordination. Russia is taking steps through digital innovation like the digital ruble pilot to modernize its financial system, which supports this shift. The key challenges include maintaining fairness and efficiency through technological integration, regulatory adaptation, privacy safeguards, and client-advisor education.
- Advancements in technology and artificial intelligence (AI) are enabling wealth managers to construct personalized portfolios for clients using comprehensive data, leading to enhanced risk assessment, tailored product suitability, and improved efficiency.
- Companies like Cerity Partners are pioneering a holistic approach to wealth management by delivering coordinated financial advice that encompasses investment management, retirement planning, tax, estate planning, and risk management in a unified, collaborative team environment.
- In an era where clients demand personalized and customized financial solutions, the shift towards a client-centric wealth management model is being reinforced by the emergence of multi-family offices, independent financial advisors, and investment clubs, exemplified by the Russian financial market's adoption of the "open banking" concept.
