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The Power of Personalization in Retail Wealth Management

Shiva Nadarajah
Shiva Nadarajah

The wealth management industry is changing. To customers, it's not just about how much they have in their bank account, it’s about the advice and guidance they get from their adviser to meet their financial goals.

Personalization is critical as it provides one way that advisers can remain competitive with other firms that may offer lower fees or higher returns on investments. But while personalization has typically been reserved for the highest tier of customers, new tech has made it possible for clients with fewer assets to demand increasing levels of personalization from their advisers.

Our recent survey found that the demand for personalized, goal-based planning and other specialized services continues to grow among investors. 58 percent of those surveyed said that they want personalized financial planning within the next two years.


The importance of personalization

Personalization is the foundation for next-generation marketing and loyalty. It’s increasingly becoming a focus across the industry as traditional practices—such as basic portfolio modeling and standard asset allocation strategies—have become commonplace. This has opened the door for advisers to offer tailored advice and personalized portfolios that align with a client's unique goals and objectives.

From the client’s perspective, personalization increases the probability of achieving their objectives while potentially minimizing their tax burdens. This trend has allowed advisers to explore additional ways to reach and serve more customers, enabling them to grow and sustain themselves. Personalized advisers provide a range of services that their clients—particularly those who may not be able to afford high-priced products—might not be getting from other firms.

Following the global pandemic, wealth management firms find themselves in unchartered waters as publicly available portfolio performance data and the popularity of robo-advisers have dramatically increased clients’ expectations of the industry.


Types of personalization

Advisers can apply personalization at any stage of the client-adviser journey. From deeper servicing engagement to custom wealth products, personalization ensures solutions are tailored to a client's unique needs.


Client servicing

Increasingly, teams of managers with a depth of expertise in a client's circumstances are assembled to develop offerings tailored to the client’s profession or source of wealth, offering differentiation over cookie-cutter solutions. 57% of the investors in our survey believed providing innovative investment ideas is the best way to attract business.


Content personalization

As clients are willing to share more data, advisers can customize portfolio selection context and market news to offer more relevant information. Younger clients in particular are used to higher levels of digital engagement and advisers who can serve up relevant information in a timely way, at scale, will build client trust.

One challenge advisers face is the myriad of platforms they have to rely on to source this data internally. The data-driven wealth management industry is in a constant state of change, as various platforms struggle to distribute and consume information.

To solve these challenges, advisers need an optimized content management solution to enhance investment advice, improve adviser efficiency and deliver a better client experience. An optimized content management solution should:

  • Increase efficiency of content generation and distribution
  • Help improve relationship-building with clients through communication channels
  • Provide customized financial information tailored specifically for each customer's needs


Financial planning

For generations, advisers have thrived in understanding their clients' circumstances and views on risk, enabling them to create solutions tailored to the client’s specific need.

For example, information such as the size of a client's household, their state of residence, their earnings and their unique views on future potential and risk tolerance are valuable data points in building personalized opportunities.


Investment management personalization

New technology has significantly reduced the costs of offering personalized advice and custom portfolios to clients. By leveraging the following technological advances, it's now possible for wealth managers to offer personalized services at a reasonable cost, enabling them to better compete with firms that offer lower fees or higher returns on investments:

  • Automated portfolio allocation enables advisers to automate the trading and rebalancing process. Automated reporting capabilities offer the adviser the option to communicate portfolio adjustments to their clients at scale.
  • Tax-loss harvesting is an investment strategy designed to reduce taxes by realizing tax losses on investments before the end of the calendar year. To generate a tax loss, the investor will sell securities in a taxable account that have declined in value or up to their cost basis.
  • Custom indexing is a method that is growing in popularity with advisers. Custom indexing offers advisers the capability to design stock indexes personalized to the needs of investors, choosing from different sectors and regions to diversify portfolios. The advantage of these custom indexes is the ability to also create indexes around a client’s existing assets, without triggering a sale and incurring taxes.


How we make the future real

Publicis Sapient is already working with several banks and robo-advisory companies to define client-centric business strategies and assess the impact on the traditional wealth management market. Our research capabilities allow our clients to receive direct feedback on the design and usage of their adviser platforms as we continually optimize the experience for deeper client interaction and strong customer growth.


Next steps

Wealth providers can take practical first steps towards providing tailored and personalized services by digitizing processes, aggregating data, working with the partners in the tech ecosystem to develop predictive analytics.

Forty-nine percent of investors surveyed viewed a simple, intuitive digital experience as one of the top criteria for evaluating providers, but only 18 percent are very satisfied with their current adviser’s digital experience. And with 44 percent of respondents  planning to move their funds over the next two years, it’s never been more critical for advisers to meet their customers’ expectations.

Advisers should aim to create seamless digital experiences that are fully integrated with adviser-led channels. Underpinned by transparent data frameworks and enabled by technology, digital interactions should match the personalization of face-to-face contact.

Wealth management firms currently have the best opportunity in a generation to build an emotional connection with their clients. Clients are looking for more than just financial advice, and wealth managers can help them find practical ways of accomplishing their goals through personalized experiences tailored specifically to them.

Shiva Nadarajah
Shiva Nadarajah
Senior Vice President, Publicis Sapient

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