“Digital transformation” is the most widely used catch phrase in wealth management. The definition varies widely based on who you are asking and when you are asking it. What is clear is why we need to do it. When surveyed, wealth managers told Broadridge they see customer retention and greater business agility as leading benefits, both are critical in growing a wealth practice. The problem is we are struggling to make progress with 78% of investors still wanting firms to improve the customer experience. If the priority is high and we are investing heavily, why do we struggle? Simply put, as an industry, we have focused on meeting client expectations versus creating an experience for the client.

If we want the benefit of transformation, we need to be prepared to pay the cost of transformation, which goes further than the economics. Digital transformation requires a change in mindset, not just a change in technology.

What Is Holding Us Back?
Transformation is creating a path to address a future need. Nearly all projects start with this intention. We see the problem, understand the objective, quantify the risks and align the technology. Then, there is a shift, many times unknowingly, to fix a current challenge rather than winning the long game—losing the opportunity to make meaningful progress on positioning ourselves for the long term.

Reasons Why This Continues To Occur
Fear of failure.
The path to transformation is rarely a straight line, and we know there are always challenges to overcome. Sticking with a bad solution or claiming success when you have not reached it wastes time and resources. There is truth in defining something as a successful failure. Besides eliminating one branch of the decision tree, we learn more about the problem, potential opportunities to improve, and if our solution assumptions are correct. 

Averseness to change. As a human it is natural to avoid change, sometimes at all costs. We are uncomfortable feeling uncomfortable. We also tend to feel we are already doing things the right way even if that means supporting different technologies, and multiple databases with the same information. By default, this makes it difficult to scale a process from end to end. Forcing transformation is a bad thing, but understanding that we have a problem to solve and finding ways to address it will always be the right option.

Decrease in executive involvement. We know transformation requires engagement at all levels to be successful. However, most change is driven from the top either through organizational goals or the need to reinvent yourself strategically. Furthermore, budgets are a function of the C-suite, driving involvement during the planning process of all major initiatives. Disengaging or a perceived lack of support sends a strong message to those executing the change. 

A defensive approach to problem solving. We tend to naturally look inward at what is needed to address our goals. This causes us to focus on what the requirement means for us rather than how it impacts the client experience. The typical problem statement starts with, “what do we need to be successful?” Rather than, “what does the investor need and how will that help us meet our goals?” This small yet subtle shift impacts our ability to deliver meaningful experiences.

Call To Action
Stop the “we have always done it that way” mindset.
All process improvement projects start with an assessment of the current state. When asked why a process is done a certain way, the most common answer is “we have always done it like this.” If that’s the case, how do we know that is the best, and most efficient way? More importantly, do we know why we are doing it at all?  We should never be afraid to challenge the status quo. If it is truly the right way to do something, it will stand the test of being challenged.

Design with empathy. As a wealth manager, the problems you need to solve are rarely your own. These problems are for a particular group of people who have unique needs. If you want to create an experience, you must step in their shoes and develop empathy for who they are and what is important to them. Knowing and understanding your customers’ digital friction points is the first step. Determining how to personalize the experience by delivering the right solution or needed data at the appropriate time comes next. At the end, we have a true user experience and not an encounter tailored to achieving an expectation. 

Disrupt yourself. Once we have a critical process set, our tendency is to leave it alone. That may not be the right approach. If the activity is important, shouldn’t we want to make it better to stand out in the market?  Rather than just look at what is broken, we should look at everything that can be improved. This creates a differentiated experience because we have chosen to go against the status quo. Getting there requires recognizing where the growth will come from and working backwards from the user experience to define a more transformative solution. Also, avoid a room of “yes people” or individuals who are susceptible to “groupthink.” Encourage alternative thinking to get ahead of the competition. 

Putting It All Together
Change is hard, transformation is harder. The barriers to success are created more by how we are approaching the problem than the technology used. Your competition is different than in the past and your clients will be constantly changing. This is creating new problems, which require different solutions, and more importantly, a different approach regardless of the technology. 

Mike Tropeano, CFA, AIF, is vice president of wealth, bank/trust and retirement consulting at Broadridge.