For the first edition of our Financial Services Data Analytics Spotlight, we are speaking with Erick Gonzalez who is currently leading the Financial Services Data & Analytics practice in the Evalueserve Chile center. In this interview, we learn about the changes wealth management has gone through, the future of data analytics in investment management, and developments in the wealth management space.
Evalueserve: Thank you for speaking with us. Before we jump into our discussion, please tell me a little about yourself and what you are currently working on.
EG: I’ve been with Evalueserve for about 10 years, primarily supporting Financial Institutions in business, customer, and marketing analytics. A very healthy portion of my time goes to Wealth and Investment Management. I currently lead the Data Analytics team for Financial Services in Evalueserve’s Chile Office. I have a bachelor’s degree in computer science where I specialized in computer networking and hold an MBA in Finance and did some web development in the early 2000s. This seemed like an odd combination of skills back then, but with the current cloud computing and web-everywhere trends, especially in the finance industry, it all fits together nicely now.
Currently, my team is developing and curating analytic solutions to support advisors and relationship managers in the wealth management space. We’re working on forwarding some concepts such as Advisor 360, Advisor performance Measurement, and Data surfacing (as opposed to data drill-down) regarding BI and last-mile solutions.
Evalueserve: How has the wealth management space changed over the course of your career?
EG: It has changed a lot, and at the same time, has not changed enough. I think the most obvious change is how the self-directed investment and robo-advisor platforms transformed some of the rules-of-the-game compared to the traditional Advisor-led business model, not just because it changed the customers' expectations in inaccessibility and information. These platforms:
- Give individuals better access to see and understand their portfolios.
- Make market research content and opinion pieces more accessible, which were previously reserved for the Advisors.
- Enable users to trade at any-time, any-where, and with reduced fees and commissions compared to the full-service Advisor-led model.
So, in essence, users have real-time visibility of their assets/wealth and access to make data-driven decisions at reduced costs. These are some bold changes, especially if you take a step back and see how access to information is a big part of the value an Advisor can provide.
Now, I say it hasn’t changed enough because this has created other problems, some of which the Advisors already had in the legacy model (e.g., the overflow of information). Think about your personal finances, especially if you are actively or passably investing in the market.
- How do you keep up with the news?
- How do you identify what is important to you while also considering your financial goals, portfolio, or risk tolerance?
- Are you capable of pinpointing how a particular piece of news will impact your wealth?
Now multiply that by x10, x20, etc., and that’s the reality for Advisors. It’s practically impossible to keep up with everything. This is where wealth management institutions don’t seem to be doing enough to support Advisors. More information on its own is not good enough; relevant and timely information is more important and where advanced analytics could play a key role.
I also see this as an opportunity for markets like Latin America. Latin America doesn’t have as many qualified Wealth Managers or Investment Managers as North America or Europe but is steadily increasing access to investment options. To me, this means that digitizing a lot of the Advisory processes could be a partial solution to the lack of qualified Advisors. We’re already starting to see this in fintech solutions, mostly for Investment management, but still far from where it could be.
Evalueserve: As we edge our way into the post-Covid era, how has the pandemic affected wealth management?
EG: COVID highlighted the need to have timely information and the ability to adjust models on-the-fly. Back in the first quarter of 2020, as the pandemic was ramping up, many firms started realizing that things were changing daily, not weekly or monthly. Wealth and Investment Management is a fast-paced business by nature. Those that react faster usually have a better chance of obtaining higher returns or minimizing impact. Despite this, a lot of the analytics utilized in this space are very manual and ad-hoc. There’s been a considerable effort to produce market research content, but that’s not enough; the expectation is that the information will be personalized and contextualized to the high net-worth individuals’ needs. Before COVID, this was good to have. Now, it is a necessity.
Evalueserve: What do you envision for the future of investment management?
EG: When it comes to Investment management, there’s going to be a regression that places more emphasis on advice and less on accessible information. There’s no point in generating more information if the end-user doesn’t know how to use it to accomplish their strategic investment goals. Many DIY investors will realize this and seek professional advice without wanting to sacrifice access to the self-directed investment platforms they’ve grown accustomed to. Intrinsically, this is what many consulting firms such as BCG and Deloitte are highlighting when they say that Wealth and Investment management firms need to invest more into digital transformation and go deeper into things like personalization.
Advice needs to be contextualized and personalized while information doesn’t have to. It’s not just good enough to build analytics solutions for personalization, these also need to be produced to achieve the required speed that is expected. The Wealth and Investment Management process used to be very linear. It would go from information to the advisor and then to the high net-worth individual. Currently, it is more of a triangle, requiring institutions to reshape and reflect this.
For Latin America, I look forward to more accessibility to portfolio and Investment data across different financial institutions. In Latin America, financial institutions still pose barriers to how customers can access their Assets and Investment data. For example, if I have different investments in different Institutions, there’s no easy way to gather all that information so I can have a complete picture of my portfolio.
Evalueserve: What are some developments in the wealth management space that you are looking forward to?
EG: We’ve seen movement in the evolution of digital platforms for investment management. Now, I’m hoping to see the same evolution in wealth management, where platforms can go beyond investment and cover financial needs, goals, and planning. It’s true that with our current state of technology, the human touch is still required for proper advice, but a lot of the pre-advice assessment and scenario building is very objective and process-driven. I’m looking forward to seeing this become digitalized and envision that analytics will be a key cornerstone.
I’m looking forward to seeing how wealth management institutions reshape their processes to better aid and empower their advisors. I’m hoping to see much more cognitive analytics embedded in their process, with an emphasis on “embedded,” so they can move faster and with curated information. I’ve been actively promoting the concept of Advisor 360, similar to Customer 360 but with a focus on the advisors, to better understand what they do and how they do it, placing this in context so that institutions can adjust to the individual needs of each advisor.
Evalueserve: And lastly, what are you excited about this year?
EG: I’m excited to see how wealth management institutions respond as the pandemic fades out. Will they continue to reshape the financial services industry, or will they significantly slow down? They’ve proven to be very resistant to change in the past, and how they react to this, will set the priorities for the next 3-5 years.
I’m also excited to see how cognitive analytics, text analytics, and similar fields become more mainstream within the financial services industry. This will be key in bridging the gap between information and advice in the wealth and investment management industry.