As the wealth management industry evolved over the years, the gaps in the traditional onboarding methods quickly started to show. While great businesses have been built on paper forms, technology allows them to scale much faster and improve the quality of their services.
Digital onboarding allows wealth management firms to acquire new clients anywhere within their jurisdiction without the need for in-person meetings. Paper forms also demand extensive manual processing, which is time-consuming, error-prone, and very expensive.
Another driver for the switch to digital onboarding has been the ease of data manipulation. Digital onboarding creates a repository of client information that can be analyzed and pulled from to create more precise risk profiles and for auditability purposes.
Digitizing client data is a necessity now that governments and regulatory bodies worldwide continue to introduce increasingly stringent rules around financial services. Compliance is much easier and more accurate if you have a computerized database.
Digital onboarding has become a critical component of efficient client management. More and more people now expect a fully automated, online onboarding process they can complete remotely at their convenience.
Digitizing your processes also allows you to personalize the services you provide each client at scale. With a digital onboarding process, every client gets the same great experience no matter which advisor they work with.
A seamless onboarding process is one of the best ways to improve your client’s experience. It is their first contact with your business, and the data you collect through these steps will allow you to tailor your services to their needs further.
Digital onboarding also lets you personalize your communication with your clients and offer them investments that align with their circumstances. Making data-based decisions also comforts clients who might be scared to put their finances into someone else’s hands, even though they are experts.
Operational efficiency improvements for wealth management offices mostly happen at the data management level. Processes like KYC and risk analysis can take up a lot of hours when they are done manually. Automating these tasks is one of the best ways to ensure your workflows don’t hinder your advisors’ most important job: building client relationships.
Another great way to improve internal operations is to integrate your digital onboarding process with your Customer Relationship Management (CRM) software. This connection gives your business a holistic view of each client’s lifecycle while providing your staff with the most accurate data possible.
Employing a multi-channel approach to client communication is a great time saver if you can identify that certain groups reply more consistently via email or SMS, for example. Breaking up your communications between age groups is also an excellent way to make clients feel like you actually spend time on each file instead of doing one-size-fits-all investing while increasing the ROI of your digital onboarding solution.
With complex financial directives like FINTRAC in Canada and FinCEN in the US, wealth management offices are tasked with thorough identity verification and asked to keep extremely detailed information about all their clients at all times. Not only must this information be collected at account opening, it must be regularly updated for security reasons. Maintaining this process by hand is extremely tedious and can be rife with errors.
You simply can’t afford to make mistakes when it comes to compliance. Even minor oversights can result in hefty fines and legal consequences. Ensuring you follow proper KYC regulations is also essential in maintaining your reputation with your clients. Data collection might seem tedious at first, but people recognize the importance of these measures and appreciate them.
KYC is one of the prime candidates for automation. A digital onboarding platform can efficiently perform these checks during account opening. Once your client data is centralized in a software database, your back office team can quickly refresh KYC data with a few clicks whenever the law requires it.
Several platforms claim to be fully integrated wealth management digital onboarding solutions, but without a few key features, you might be disappointed in their output. Below are the components you should look for when selecting a digital onboarding provider:
Digital onboarding is a significant change for most of your advisors, and some might not be tech-savvy. If your digital onboarding platform doesn’t have a good user experience, your staff simply won’t use it.
Ease of use can mean different things for everyone. From clean design language to mobile responsiveness, your digital onboarding platform should be simple and flexible if you want a strong user adoption rate.
If the digital onboarding platform you select doesn’t integrate with the tools in your current tech stack, it will feel like extra work instead of workflow optimization. Ideally, digital onboarding data will directly flow into your custodian or book of records to automatically open and update client accounts and your CRM to give your staff a complete view of each client’s lifecycle.
Another essential integration to consider is KYC/AML checks done directly during form completion. Executing these checks through your onboarding platform is not only more efficient, but it’s also easier to refresh the data down the line and make any needed form updates.
The data collected during digital onboarding is highly sensitive and must be protected adequately. Ask questions about a provider's cybersecurity measures to ensure your client's data is kept safe.
The levels of security required will depend on the size of your firm and the amount of money you manage, but common security measures a digital onboarding platform should have include:
- Data encryption, a common industry standard is the AES-256 encryption algorithm
- Multi-factor authentication
- SOC2 Type 2 certification
- User permissions
With these safeguards, your client data will be properly protected, and you won’t have any nasty surprises.
One of the most significant benefits of digital onboarding is the ability to classify and organize data quickly and efficiently. Based on the collected information, you can write personalized communications to each client and build custom investing plans to give everyone a VIP experience at scale.
With automated onboarding, you can also build different workflows to support various types of investors. For example, you could have different experiences based on age, net worth, or risk level to provide a customized introduction to your business.
Digital onboarding must be executed in a focused and detail-oriented manner. The data collected is sensitive, and its accuracy will dramatically impact your business success. Below are the core steps of a wealth management digital onboarding process:
Clients are sent digital forms to fill out and sign. Ideally, this entire process, including the digital signature, should be done directly in the form to reduce dropoff and preserve your branding throughout the account opening.
Clients then move on to KYC and any identity verifications required in your jurisdiction. This is an excellent moment to do an automated risk assessment and redirect the process to your compliance team if further review or sign-off is needed.
The account is created and integrated with your CRM and custodian. The new client is attributed to the correct advisor and added to the appropriate communication channels to remain up-to-date.
Wealth management is a profoundly relationship-based industry. Digital onboarding often represents the first step in a larger digital transformation strategy, which means one of the most significant barriers is resistance to change.
Without suitable training, advisors might be afraid that this new onboarding software will negatively impact the experience of new and current clients. This emphasizes the importance of pre-implementation training and ongoing refresher courses to ensure your entire team thoroughly knows the digital onboarding process.
It’s a good idea to map out which part of the process will be handled by the onboarding platform or your CRM. It’s also essential to determine which tasks will be automated during onboarding and which portions will still require human interaction.
Learn how Designed Wealth Management grew from a few advisors to over 100 using Mako Fintech to power their growth.
See how Bold Wealth Management successfully transitioned to a new custodian in just four weeks with the support of Mako Fintech.
Digital onboarding offers numerous advantages, from streamlining the client acquisition process to enabling more personalized and secure client interactions. By embracing this technology, wealth management firms can stay competitive, meet the expectations of modern clients, and comply with increasingly stringent regulatory requirements.
As you consider adopting or upgrading your digital onboarding solutions, remember that the journey is as important as the destination. Careful planning, ongoing training, and a focus on client-centric outcomes will ensure your transition to digital onboarding meets and exceeds your business objectives.
