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How COVID-19 Will Change Wealth Management

Miles Joseph

16 April 2020

The impact of the COVID-19 pandemic will transform the wealth management industry. While firms are rightly focusing on today’s issues, they also need to consider the period in the aftermath of the crisis, and the strategy beyond.

The following article considers how the pandemic will change the wealth management industry in future months and years. No doubt there will be a great many repercussions from this crisis, and this news service intends to help craft the agenda and thinking around this. We are keen to receive comments and analysis from readers – you play a big role in this process. From remote working to new ideas about risk management, there are bound to be a great many ideas. Let’s examine them. 

The article comes from Miles Joseph, an independent consultant. The editors are pleased to share these ideas; the usual editorial disclaimers apply. Email and

In recent weeks, wealth management firms have dusted off their business continuity plans to focus on the day-to-day business of servicing clients, running money and keeping platforms ticking over. Gaps in their contingencies have also been revealed - many envisaged failures in one location or region; few planned for a global crisis. However, necessity is the mother of invention, and each day many are inventing new solutions to deal with present issues. 

Some firms had already embarked on digital programmes to facilitate remote working and client interaction with systems that provide portals for clients to interact with advisors via secure messaging, video-conferencing, document sharing and electronic signatures, reporting and the ability to review and update data. Many have not, with a number of businesses still requiring office access to carry on their work. Others have rapidly installed Zoom, or rely on email, WhatsApp and other such platforms, in spite of security concerns. 

However, despite the varying degrees of resilience, these digital measures are baseline utilities. System shocks such as these are the moments that serve as catalysts for change and innovation. 

Every system across the world is likely to be re-imagined: economic, political, and social. The aftermath of World War II led to the UN and NATO being formed, the economic structures established at the Bretton Woods conference, and women in the workplace. 

As a consequence, wealth management propositions will change in ways we cannot envisage now. 

In parallel with navigating through the immediate crisis, it is therefore also important to consider both models for the recovery period and be ready to ride the changes in the long term. Firms need to consider all aspects of their business and its touch points to build future resilience and respond to the changed landscape as it emerges.

Client interaction: Crucial at this time is an opportunity to engage and communicate with clients, and reinforce bonds. 

Things that organisations and their clients previously considered were pain points will have been replaced by a whole new set of problems, and new opportunities, propositions and solutions will emerge. Firms that are more responsive to changed client needs and adaptive to “new normal” working practices will have competitive advantage compared with those that find it harder to adapt, or adapt less swiftly.

In the recovery period post the immediate COVID-19 crisis, there will be the opportunity to embrace a more digital way of working. Advisors, many of whom were reluctant to adopt change before the crisis, have been forced to work from home (WFH) and use digital communication methods to interact with clients. Clients have also had to accept the change. Firms may find it possible to make this the standard modus operandi, taking out significant expense and creating advisor capacity. 

Robo-advice platforms, which in recent times have lost some of the original promised sparkle in the consumer space, may emerge as enabling technologies to supplement traditional firms’ core propositions. Firms are recognising that whilst they may not much like the investment offerings and the simplistic advice or guidance mappings that the robos offer, they provide much in the way of wrap-around digitalisation features to engage, onboard and service clients.

Business operations: There will be new pressures on the firm’s internal operations, with the likelihood of reduced operational capacity through the inefficiencies of broken models and changed client behaviour. Operations that rely on manual activity will be stressed, and the business mix and activities that clients will have triggered now may have radically changed. 

In recovery, operational efficiency initiatives need to be considered to provide greater capacity and resilience in future, and to build flexible operating models that can adapt as the demands on it change.  

Moving on from automation of processes, firms may consider that it may now also be the time to initiate an AI programme. With humans in the loop embedding knowledge, AI can apply techniques such as Natural Language Processing (NLP), Automated Reasoning and Machine Learning to such diverse activities as client acquisition, advice, onboarding, executing instructions, flagging financial or clients at risk, and personalised reporting near real-time. These techniques may provide the means to adapt and develop propositions and processes more readily as the market evolves. 
Suppliers: Firms need to carefully review the resilience of their suppliers. 

Firms (or their providers) may have elements of operations or delivery outsourced and/or off-shored. The lockdown response to the COVID-19 pandemic in many offshore locations has been extreme, and in many regions with no opportunity or capability for WFH. This has caused some firms to fail-over to an onshore model, with the consequent capacity constraints. Longer term, it may be appropriate for firms to re-consider their off-shore (or outsourced provider) relationships to ensure that they can guarantee resilience in their operations. 

Competitors: Competitors will also be adapting to challenges to varying degrees. Open dialogue with competitors may reveal partnership opportunities, such as the setting up of shared utility services that benefit all parties without compromising the firm's USPs. There may also be acquisition opportunities to look at with distressed competitors.

Staff: Across the world, the COVID-19 crisis has and will cause trauma for many, with the loss of loved ones, the social impact of isolation, economic impact and hardship, and the consequent and very significant impact on physical and mental health. Firms will need to invest far more heavily in health and wellbeing for their staff, as well as financial support programmes. 

Amidst all this, roles will be changing, and through automation and digitalisation, fewer staff may be needed. Office space can also be reduced with many adopting a significant WFH model. 

The shape of the “new normal” will emerge over the forthcoming months. Post-crisis the relative competitive advantages of firms will be re-sequenced. How well firms will fare in the bounce-back will be due in part to how open they are to making bold moves to adapt to this ‘new normal’. 

Leadership with integrity will be vital to provide a foundation to rebuild morale and positive sentiment, and to develop and communicate a clear vision for the strategy of the firm. 

About the author
Miles Joseph is an independent consultant with more than 25 years in wealth and investment management. He specialises in helping wealth firms shape strategy and the design, build and launch of innovative client propositions, operating models and technology solutions.