The advent of software as a service (Saas) and evolutions in working practices has created a wave of innovative Fintech companies ready to bring new blood to the financial sector. One of the aspects of wealth management that saw the most improvement from being digitized is client onboarding.
But old habits die hard, and phasing out paper forms is a difficult task when software can have a steep learning curve. However, a good, easy-to-use user interface(UI) can do wonders in changing the way software is integrated into workflows. It’s why we doubled down on UI development at Mako, and it’s what makes our product so great.
This article is derived from an interview with Mako’s Product Manager and Designer, Heather Mazzonna, where she talked about the pain points of the wealth management field, how she built a better onboarding experience, a strong user interface and gave a few pointers on where the platform is headed.
The onboarding process in wealth management is a complicated process, and errors can have grave consequences. It also involves a variety of actors, from clients to advisors and staff, who all need to communicate efficiently during the process.
Here are the most common wealth management onboarding pain points:
One of the biggest technological opportunities for wealth management is in reduction of administrative work. A typical paper-based workflow can quickly drown an advisor in side work, leaving too little time to provide a good service and build new relationships.
Technology can easily be leveraged for bulk actions like data imports and initiating workflows for re-papering and refreshing KYC information. These tedious tasks should be automated to not only free up advisor time but also provide a better experience for customers.
Opening accounts at a wealth management office can often be confusing and tedious. An onboarding software like Mako allows advisors to have significant control over workflows, which in turn helps create personalized and optimal experiences for their specific needs.
This workflow flexibility also allows you to provide a strong, branded experience for your clients that is consistent across all forms.
Humans make mistakes, no matter how trained they are and how many checks are in place. Whether it’s your client, your advisor or your admin staff, there are numerous opportunities for costly mistakes in a wealth management onboarding process.
Mako implements error detection and automatic pre-fill functionalities to minimize potential errors in processes while dramatically reducing the onboarding time.
Onboarding a new client involves a variety of tasks, forms and communications to organize all the required information. It can quickly become a hectic process that can easily overwhelm an otherwise busy advisor.
When using Mako, statuses, audit trails, signatories and document management are all built into each workflow to help advisors keep organized and informed of the progress as documents and forms are filled.
A good onboarding experience has multiple benefits for a wealth management office. Beyond obvious efficiency improvements, onboarding is often the first impression of your firm a new client gets. Making sure it is streamlined and consistent can do wonders to build early trust.
Here are the core elements of a good digital onboarding experience:
Digital onboarding is quickly becoming the norm, and some clients might even be reticent to engage with a firm that is fully paper-based. Technology like E-signatures, ID verification, error detection and more have become the standard that clients expect when onboarding.
Mako integrates all these technologies natively within forms so clients never have to leave the experience they are in.
Information collection is essential to wealth management for legal reasons but also to provide adequate customer service. However, this process can quickly become overwhelming if it isn’t supported by an adequate framework.
Mako provides advisors with the capability to input the necessary information on behalf of clients at their discretion, facilitating the relationship-building process.
The account opening process can quickly get out of hand, especially when multiple institutions and government forms are involved. Personalizing the experience can be a powerful way to streamline the onboarding process and guide clients through.
Our product displays only the necessary information to clients depending on workflow actions and investment objectives through customizable workflows to create a more efficient and focused process.
The wealth industry poses considerable challenges to fintech startups looking to serve the market. Every wealth management office is different, and their requirements can greatly vary based on employee count, client type, custodian and more. Consistency across platforms is also a big priority and can influence the way a product gets developed to interact well with other software used.
This peculiar set of requirements has led Mako to not set a design philosophy in stone. Instead, Heather embraces iterative design processes and scalable systems. Startups can easily become bogged down by new features. Instead, Mako focuses on building systematic solutions, as opposed to ad hoc approaches, in order to have a scalable structure and foundation for the product.
“Having a singular design philosophy can be dangerous for a software company. The core of my product design strategy is based on iterative design processes and a focus on building scalable systems. It’s an approach that keeps us agile and allows us to tailor our product to our client’s needs. I find fulfillment in designing powerful systems that allow users to easily leverage them.” - Heather Mazzona
These systematic solutions are then turned into user-friendly interfaces that allow users to leverage the full potential of the technology and complete functions that increase their efficiency. The building blocks behind Mako also make it a very customizable platform that can easily be modulated to suit your needs.
Mako has seen a tremendous amount of user interface improvements in recent months. A full UI library has been built to ensure a consistent experience across all features used to improve adoption from both advisors and clients.
Additionally, a robust in-app notification system was implemented, allowing users to be notified of upcoming KYC refreshes in bulk to launch the KYC refresh workflow on the platform with only a few clicks.
In a similar vein, a roles and permissions feature was introduced to allow firms to segregate users and data in almost any way an organization needs and can continue to scale to give organization admins the ability to control every user entitlement they need efficiently by using roles.
By building a low-code, modular platform, Mako is able to provide a customizable and streamlined user experience that can easily grow along with your business. User interface has been an important focus for Mako from day one for a very simple reason: Software with bad UI doesn’t get used.
When you choose Mako for your onboarding experience, you can rest assured it will easily be adopted by your organization, no matter their proficiency level. And, of course, we’re not resting on our laurels, with a slew of improvements slated for this year, including workflow navigation, draft mode and e-signature guided process. Look out for an article soon for a more detailed look at these new improvements.
If you’d like a detailed demo of our comprehensive digital onboarding software, contact us here.
So in my view an appropriately diversified portfolio should have enough exposure to different asset classes, that its able to withstand a wide range of market disruptions. Usually, it’s some kind of negative or positive event… they’ll affect different asset classes differently. So by having your eggs in different baskets you’ll be well insulated from major risk. For example, there’s some kind of change in the housing market… both by having some exposure to it, you won’t miss out on the opportunity to make money. But if it’s something negative, you’re also not going to lose all your money if all of it were in the housing market for example. So at a high level, a properly diversified portfolio should grow in a growing market and yet not be at risk of major losses in a declining market.
You asked also about an efficiently diversified portfolio, and I would say that that’s a portfolio that achieves those goals with a minimum of different positions. There’s a lot of good reasons to have fewer positions in your portfolio. Being less complex means a portfolio is easier to rebalance and administer. Every time part of your portfolio goes up or down, you're going to need to rebalance it a little to make sure that it stays with the right allocations and the fewer positions you have, the easier it is to do that..the less trading fees you incur doing that.
There is a tradeoff between being completely diversified and being efficiently diversified. If you were completely diversified then you’d have a proportional segment of absolutely everything you could invest in under the sun, like shares of palm oil futures or something like that. I don’t think everyone should have palm oil futures in their portfolio but I’m not a wealth manager. I think it comes down to your portfolio and how large it is (probably the Canada Pension Plan has a proportion of palm oil futures in it). You’re going to have to talk to your advisor and choose a degree of complexity that’s right for your portfolio.
CN: Let’s just take a step back - what does a typical portfolio look like and has that changed over time?
RB: Yeah, so I'm not entirely sure what a typical portfolio looks like these days because it's actually changed quite a lot over time. I think common wisdom used to be that the classic balanced portfolio was 60% public stocks and 40% bonds. These days that's ancient history. Most would say that the bond allocation should be a lot lower these days in this age of unprecedented low-interest rates. These days it’s the stock portfolio that’s been driving a lot of the growth. I think a well-diversified portfolio in the modern era should absolutely include exposure to all kinds of alternative assets (that aren't even really that alternative but still kind of fall out of that traditional bucket). So you know I mentioned real estate, private companies, maybe for example commodities or other types of investments. So I think that there are a lot of things that you can invest in and your advisor can guide you on what’s appropriate for you.
CN: Yeah that makes a lot of sense. Talking about alternative investments, we’ve heard a lot this year about ESGs, impact investing, alternative investments… do you think there’s more of an appetite today for these types of investments than in the last ten years?
RB: Yeah that’s a topic that’s close to my heart having previously started an impact investment company. It’s definitely been a gigantic increase in interest. I think when I started my previous company we were speaking to large wealth managers and having them say “we’re barely getting a grip on early ideas.” Like not including gun manufacturers or tobacco companies, and now these same companies are launching impact portfolios and marketing this aggressively. So there’s definitely been a seat change, it’s a real industry, and there’s a lot of studies out there and data showing that ESG or impact investing can equal or outperform non-impact investments. So I think it’s a huge part of the market these days. That said, one of the things that’s driving it is people’s interest in it. I think that one of the stories of the investment industry has been the personalization of it. People’s portfolios are being tailored to their own needs and circumstances. Impact investing is definitely a piece of that. People are environmentalists, but an institution is not an environmentalist. It doesn’t live and breathe the impact on the environment the way an individual does. The person who is active in the David Suzuki Foundation for example is going to be active as an impact investor and it’s appropriate for them to be.
That’s a great question. I think there's a lot of advantages and you gain a lot with an automated platform. For me, it's a lot easier to manage. I have some of my money in one of these platforms and I barely think about it. It's being rebalanced all the time. The costs are much lower in terms of expense ratio for the same kind of rebalancing. Again you're missing a lot with that, but on just the mechanical portfolio rebalancing you're getting a great deal there. I would say that two other advantages are up-to-the-minute reporting, so you always have that login where you can see your position, see how your portfolio is doing historically. And finally, this is an advantage for me and anyone who doesn't love doing taxes, but typically they’ll take care of your tax forms for you, and end up with much simpler tax forms, so it kind of works out what your cost basis was and how much you have to report.
CN: So let's talk about the other side of the coin then...what are the risks of not having a seasoned professional managing your money?
RB: I wouldn’t exactly phrase the question that way. You know it's more what’s the benefits of having a real wealth manager? Some of the clients of robo advisory firms may not even be aware that they're missing out. A wealth manager isn't just balancing your stocks and bonds, that's kind of the very lowest mechanical level of what you get out of the wealth manager. Really they're your advisor on your life. Intimately intertwined with you because you're thinking about retirement planning, on planning for college for your kids, when is the right time to buy a house, and when should you get life insurance, for example. An advisor can help you with all of those decisions and they can connect you with service providers like a mortgage broker when you may be in need of one. So I think that you get a lot of value out of having one of these advisers, particularly when you get to a stage in life when these kinds of services are more about the long-term and your life circumstances are far more critical.
CN: There are clearly pros and cons and two sides of the story depending on who you're asking. Like you said, what stage of their life they’re in ...but do you think the platforms that we’re seeing emerging like to Qtrade, Wealthsimple, and all the rest will ever become status quo?
RB: Yeah, I do actually. I think that similarly to how you know we’re using online platforms to automate everything for us (I can’t think of the last time I used to travel for example), everything you’re going to be trying to do with your money is going to be automated, and it’s going to be appropriate to be handled by one of these one of these platforms. In particular, for most people at an early stage in their lives that have few assets to manage, not a lot of complexity, not a very extended personal family circumstance, it’s gonna make a lot of sense to have a low fee robo worry about it. But at some point their life circumstances are going to get more complex and you’re gonna get married, or maybe you’re not, or you may have other objectives that you may want some advice on and at that point it may make sense to either supplement the robo advisory portion of your portfolio, or graduate to a more holistic wealth management view.
CN: Thank you so much Raph, these answers were great. It’s always insightful chatting with you so thanks for sharing those answers with us today.
RB: It’s my pleasure.