Here we present reflections from the recently issued WealthBriefing research report on onboarding - produced in conjunction with Appway, SIX Financial Information and KPMG.

WealthBriefing recently partnered with Appway, KPMG and SIX Financial Information to produce a wide-ranging research report on client onboarding trends in wealth management, which was accompanied by an international roadshow of thought-leadership events. This is the first part of a feature pulling together key insights which emerged from this fascinating project.

The research reports produced by WealthBriefing cover a wide range of the strategic and operational issues wealth managers face. However, they all share the same broad aim: to gauge where the industry currently stands and to signpost where it should be heading by gathering best practice insights from senior executives and consultants at leading firms internationally.

Synthesising these views, along with those of front-line professionals, is always a fascinating task, and particularly so when the subject is as wide-ranging and topical as client onboarding. We pride ourselves on providing the industry with research that is both broad and deep, and on shining a light onto previously under-investigated areas. As such, it very quickly became apparent that client onboarding was an ideal candidate for a new piece of in-depth research.

In many ways, the topic of improving client onboarding captures the zeitgeist of the wealth management industry, since it is where some of its most pressing concerns intersect. Given the intense scrutiny institutions are being subjected to by regulators internationally, demonstrating immaculate compliance is clearly top priority for all firms. At the same time, wealth managers are under pressure to deliver a really slick client experience during onboarding. They need to differentiate themselves by showing that they have put real thought into making a notoriously “sticky” process go as smoothly as possible. More broadly, wealth managers need to ensure they can stand up to service comparisons both in and outside of the financial services sector. And, as if that wasn’t enough, wealth managers then need to serve both these masters as efficiently and cost-effectively as possible to protect their profitability in what continue to be straitened times for many.

Competing priorities
Even at first glance, it is clear that there are huge inherent tensions within the onboarding piece. On the one hand wealth managers need to onboard clients as quickly and painlessly as possible, but on the other they must be absolute certain of fulfilling the letter of the law on a vast range of compliance requirements at the national, regional and supra-national level. Furthermore, these requirements are increasing all the time. Witness, for example, the recent moves towards a “mini-FATCA” being made by the UK tax authorities, adding even further to what could fairly be described as an alphabet soup of new rules to have hit the sector in recent years.

Yet while mitigating business risk has to be wealth managers’ absolute priority, most firms will also be feeling an urgent need to stem spiralling compliance costs: PwC has predicted that compliance is going to account for 7 per cent of annual wealth management revenues globally by next year. However, on the side-lines of the events which formed the international client onboarding roadshow, senior executives were often very frank in telling us that at their firm compliance costs were accounting for a far greater proportion of revenues – to quite a shocking degree in some cases.

With new regulations coming thick and fast, even just keeping on top of the compliance requirements for each market and client segment a firm operates is a significant task. It is little wonder that compliance is starting to look like a dark hole for some firms, siphoning off ever-greater amounts of money, time and energy. Coping with the compliance burden is undoubtedly a big distraction from wider strategic efforts at many wealth managers today, and a significant bar to innovation.