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Julius Baer On How Tech Changes Role Of Wealth Advisors

Tom Burroughes

7 October 2019

This publication is looking at how new technologies change the role of wealth managers and whether these innovations have been over-hyped or misunderstood. As part of this series, we interviewed Nic Dreckmann, who is the chief operating office at Julius Baer, the Swiss private banking group. As it is Switzerland’s third-largest bank, with a significant presence in continental Europe, the UK and Asia, it brings considerable weight to this topic. 

In your view, and from the view of your organisation, how do you see technology changing the role of wealth management advisors? Can you give some specific, real-life examples?
There is no doubt that advisors will be augmented through technology. Previously, RMs supervised all client portfolios manually. Today, we have sophisticated solutions that check portfolios overnight to ensure they are still in line with client requirements and/or if there are interesting investment opportunities to be had. 

So far, the effect has been very positive. Our advisors spend less time with analytics and more time with clients. Furthermore, our advisors are supported with various process-embedded checks - be it in the context of suitability, eligibility or cross-border - helping to fulfil regulatory requirements.

Of all the changes wrought by tech, in your opinion, what has been the most significant change in how advisors work? Conversely, what do think has been the most over-hyped change from technology? 
The automated health checks of client portfolios, as well as regulatory automation has changed the way advisors work and how many clients an advisor can service. 

The second part is a bit more difficult to answer. Over hyped has a time nexus. AI might be over hyped in the short-term but underestimated in the long-term. The same applies for blockchain technology. 

When a person is thinking of working for a new firm, changing jobs or going for promotion, do you think they increasingly want to know what sort of tools they have at their disposal so that they can hit targets and be more effective? Are the tech tools that firms provide now an important part of the overall jobs package and HR conversation?
Indeed, the tools a firm provides are becoming more and more important in the decision-making process. Having a solid internal infrastructure is important and its absence might weight negatively, as passionate advisors looking for the best solutions for their clients are becoming more and more tech-savvy and demanding - less in terms of system architecture or design but with regards to capabilities offered. Ultimately, these systems will not only help us to become the trusted augmented advisor to our clients – but enable us to train our existing employees too. 

What level of training should advisors expect to go in for today when using technology as part of their job? How much should they do on their own initiative and what should firms provide? 
It is vital that advisors are trained in the proper processes and systems to provide better client service and efficiency. Training should be blended between classroom, self-study and online tutorial - in some instances, brought to life with gamification.  

Given the rising relevance of technologies such as AI and blockchain, there is also a need to educate advisors on these key technologies and provide basic training. 

At Julius Baer, we run lunchtime sessions - mainly run by colleagues who have subject matter expertise - to provide further insight into these areas. If an advisor would like to go into further detail, we look into development training judged on a case-by-case basis. 

A big debate recently has been whether tech, such as artificial intelligence, is going to either replace people or make them more effective, or possibly a bit of both. What in your view is the likely outcome? 
On a more general level, AI has the potential to displace humans due to automation – however, it is also creating a number of new jobs, take the example of the rising need for data-scientists. At Julius Bear, we have implemented a “future-skills upgrade programme,” where our employees can assess themselves against what we believe to be the skillset of the future. Based on the results, we offer various training programmes to pro-actively close these gaps.

How can tech help advisors deal with issues such as foreign languages, certain sources of news, KYC background checks and ongoing monitoring, checks for red flags regarding money laundering? Are there examples you can give?
Advanced algorithms are, for example, incredibly helpful when trying to detect and prevent fraudulent payments, new attack vectors in cybersecurity, or market and data anomalies, among others. 
We see different levels of maturity driven by the (un)availability of data. Take payments for example - there are enough data to allow algorithms to detect unusual patterns (fraud, AML) with statistical relevance. These systems are very mature. 

However, the situation with regard to personal KYC information is different. Whilst background checks, negative news searches and other more general information can be sourced and evaluated automatically, the availability of useable data-sets in terms of quality and size prevents mass automation when faced with more individualised questions on KYC.  

Do you see different levels of tech adoption by advisors of varying ages and backgrounds? Have you seen any specific trends?
We see different levels of adoption by advisors, however we are yet to see any clear patterns. You may find very seasoned private bankers using technology in the same way our children do, and younger colleagues not using it at all. However, one can observe that the general level of tech adoption is rising. We may find a correlation between a client’s take on technology and that of their advisor - since long lasting relationships are normally based on shared values.

No conversation about tech can be complete without addressing cybersecurity issues. In your case and that of your organisation, what training should advisors receive to avoid being hacked and to protect their clients? What sort of threats particularly concern you? What sort of training do they receive and should they receive?
Cybersecurity attacks have become more sophisticated and phishing attacks or Ransomware have become much harder to detect. 

Technical defensive precautions are a must for financial institutions. However, it is crucial to continuously train advisors to identify security issues, such as fake phishing emails, via regular drills to equip them with the tools they need to keep their clients and the business safe and secure. 

Have you found it easier to illustrate reports and situations to clients as a result of tech.? Does it make it easier for advisors to work out “in the field” than before?
Of course, automation has significantly improved our client reporting, but the bigger change is yet to come. In the past, there was usually an identically structured report for all clients. Now, we have modularised reports that fit the needs of each individual client. At some point in the future, each report could be even more personalised - yet produced automatically.

In five or ten years’ time, in what ways do you think the role of advisors will have changed and to what extent will tech be the reason for that?
Our clients want to concentrate more and more on their core businesses and family affairs. At the same time, they feel increasingly uncomfortable with regards to the question of whether their total-wealth is being protected – let alone if it generates returns aligned with their sustainability requirements. This is why we are seeing the re-emergence of trust. Our clients are looking for a person whom they can trust and discuss all wealth matters.

Here, we will see technology used to help advisors support their clients through applications such as “augmented banking”. To permanently deliver the best option, advisors will rely more and more on systems and business networks to find, evaluate and structure their offerings. 

Key technology to deliver such personalised yet scalable offerings will emerge out of AI – more precisely in the sub-field of machine learning. A second key technology enabling scale is the availability of very secure cloud infrastructures, accessible through protected APIs. The opportunities provided by technology, combined with the unique traits of human beings will offer much more positive results than downsides. And yes, in the beginning, it will be necessary to be courageous in taking steps in unchartered territories, but it will be worth it.