Wealth managers are increasingly turning to technology to help them address issues with assessing the suitability of client portfolios, global research from behavioural finance experts Oxford Risk shows.
Its study with wealth managers across the UK, France, Italy, Spain, Ireland, Australia, and New Zealand found nearly four out of five (78%) expect global spending by the industry on technology to help assess suitability will increase over the next five years.
Around one in six (16%) are predicting substantial increases in spending on technology as wealth managers focus on improving their assessment of suitability for clients, the research by Oxford Risk, which builds behavioural risk suitability software to help wealth managers support clients, shows.
The study with wealth managers who collectively manage assets of around €565 billion shows widespread dissatisfaction with existing suitability assessments during recent financial shocks, including the COVID-19 pandemic and ongoing volatility coupled with rising inflation and interest rates.
Nearly 70% of wealth managers agreed that existing suitability systems have been too cumbersome to adapt to rapidly changing circumstances. Around one in seven (14%) strongly agree existing systems have not been up to the task.
Around two out of three (66%) questioned admit existing systems are too subjective and reliant on human judgement and biases when making assessments, the research found.
However, a key motivation for increasing technology spending is that wealth managers believe it will give them a competitive advantage over rivals and the potential for new business opportunities. Around 81% believe technology will make them more appealing to potential clients with one in five (20%) strong supporters of winning clients through technology.
