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Wealth management business owner accessing his data on multiple devices through a hybrid cloud.

7 Ways Wealth Management Firms Can Innovate

Innovation never stops. To keep pace with structural market shifts in the wealth management industry, it is essential to continuously introduce new technologies that can radically augment client experiences and support new business models’ viability.

However, to fully harness the potential of digital acceleration, new technologies must critically address consumer needs to make wealth management seamless. After all, relevance is key to staying timely and timeless.

Let’s identify the 7 main innovations that will reshape the wealth management industry in the next few years or so.

Take Your Business Model to the Next Level

1. Artificial Intelligence

Today, wealth management trends and developments are mostly associated with the game-changing technology almost everyone is familiar with—Artificial Intelligence (AI). And no, we’re not talking about androids, but highly intelligent software that plays a role in making wealth managers’ jobs better, faster to accomplish, and more efficient.

Today, customer experience is usually self-directed. There’s also an enormous data explosion among structured and unstructured data. Only big data-driven models, AI, and Machine Learning algorithms can deal with this to deliver the right solutions to relevant customers faster and more consistently. The good thing is that you or your company can easily harness the power of AI to make you more productive.

2. Virtual Collaboration

According to Nasdaq, virtual reality (VR) and augmented reality (AR) innovations help wealth management companies make managed investments intuitive for clients, most especially millennials. As more advisers become better familiarized with their skills and capabilities, the adoption rate of these two developments should increase.

The pandemic has made remote working and virtual entertainment through the cloud more accessible, affordable, and convenient. Businesses and clients meet over video conferencing services. This is a testament to AR’s capacity to help wealth managers provide virtual scenarios that can help their clients vividly picture how they are and what to explore financially.

Using these two technologies to engage clientele and harnessing their game-play to promote effective savings and investment practices is something companies should leverage.

3. Increased Tokenization

The first purely digital non-fungible token (NFT) offered by a major auction house was Mike Winkelmann’s Everydays: The first 5000 Days, which was sold for 69 million dollars. Like this NFT, more are seen to become part of the wealth management mainstream in the next few years.

An asset of a purely digital representation’s ownership rights can now be divided, traded, and stored on the blockchain, a distribution-ledger system. Fractionalizing real objects like properties may be difficult, but representing them as tokens works well.

Today, tokenization is seen to open up markets more and boost liquidity as well as make settlement processes seamless. Some even use reporting frameworks to effectively gauge progress.

4. Advanced Analytics

According to Gartner, AI-powered technologies like machine learning, natural-language processing, and deep learning will facilitate the next big advancement in wealth management analytics. It also noted that it is observing a steady progression in the technology’s deployment.

Fintech analytics systems are poised to be more predictive, offering practical guidance on the steps that companies should take for business development.

Per Grand View Research, the global market for alternative data is forecast to expand at a compound annual growth rate of 54.4 percent, poised to occur sometime between 2022 and 2030.

5. Regulatory Technology

Compliance with regulatory issues is becoming daunting for wealth management firms. And given that the regulatory ratchet turns again with new requirements from the Financial Conduct Authority and other watchdogs, wealth managers will continue to harness technology to ensure compliance.

AI-powered systems and other automated digital infrastructure are seen to take over people’s regular and repetitive compliance routines. Anticipating potential regulatory changes, more companies are seen to proactively approach tasks by using new technologies.

As processes improve, parsing through financial regulation becomes faster and easier with RegTech, allowing wealth managers to get actionable insights into their compliance obligations.

There’s also the option to work with a Managed IT Services Provider (MSP) that can implement these compliance software while offering security and 24/7 IT Support. Although, it’s best to partner with one that is certified under the necessary financial compliance standards such as:

  • Financial Industry Regulatory Authority (FINRA)
  • System and Organization Controls (SOC)
  • The Sarbanes-Oxley Act (SOX)
  • Payment Card Industry Data Security Standard (PCI DSS)
  • Payment Services Directive (PSD2)
  • or the Gramm-Leach-Bliley Act (GLBA)

6. Democratization of Financial Advice

Many people are starting to turn to financial advisors to secure their future. Democratizing financial advice, while still having a long way to go, is becoming the new innovative norm. This means that financial planning and its tools are becoming more affordable, customizable, and accessible for everyone, not just for wealthy people.

7. Stronger Cybersecurity

Wealth managers, as we know, hold millions of people’s personal and financial data, making them more susceptible to hackers. One big security breach may result in fines worth millions or even billions of dollars. Moreover, a company’s brand reputation will also get tainted with public distrust.

As the digital world poses more risks and threats from hackers, the finance industry proactively ramps up its regulatory requirements. It demands beefed-up innovative cybersecurity practices and is expected to require more businesses to comply with more complex regulations for data security.

Future-Proofing the Industry

These are just some of the innovations seen to dominate the wealth management industry going forward. Companies can capitalize on this to fare with the digital trends and ensure data security.

As a result, you can expect an efficient system and cost-effective processes, consistent service, dynamic advice, and responsible investing practices—which all result in customer satisfaction. Schedule a call with Nerds Support to see how we can help your Wealth Management firm use technology to gain a competitive edge!

IRS Safeguard's Rule Cyber Security Social Engineering Customer Data

Renew Your Tax ID Number & Secure Your Data

The Importance of Data Security

It’s time to renew your prepared tax identification number (PTIN) for 2020. A data security responsibilities statement was added to the PTIN renewal process. It was added to keep you aware of your legal obligation to have a data security plan and data protection for taxpayer information. This is due to the Safeguard Rule. The Safeguard Rule states, “financial institutions must protect the consumer information they collect.”

As cyber-criminals continue to attack CPA firms, data security becomes more important. Accounting firms have important and sensitive client information hackers can use to get access to accounts or sell on the dark web. As a result, 71% of cyber breaches are financially motivated, according to a Verizon report on cyber-attacks in 2019. Knowing that, it’s easy to see why the accounting industry is so appealing to a cyber-criminal. Moreover, they steal taxpayer information and file fraudulent tax returns that they benefit from.

IRS Safeguard's Rule Cyber Security Social Engineering Customer Data

Securing Your Data as a CPA

If you’re an accountant or part of CPA firm, don’t fret. There are a few things you could do throughout your day to minimize risk of vulnerability to these attacks and keep your clients safe in the process.

Protect all email accounts with strong passwords. 81% of company data breaches are due to poor passwords, according to another Version report. Cyber criminals, like many people don’t want to work hard, they want to work smart. Therefore, they try and find the simplest route to achieving their objective. This is to say, if their objective is to hack an account the first thing they aim to get access to is password information. For instance, protect email and work accounts by using longer, more complex passwords that use a mix of numbers letters and symbols. Multi factor authentication is an additional way to prevent password access. For example, Nerds Support’s cloud software partner “Workplace”, requires users to log in through their desktops and their mobile devices. If the user fails to confirm they’re attempting to log in to their account within a few seconds, access is denied entirely.

Download anti-phishing software programs that help fight against phishing scams. 92% of malware is delivered through email. In addition, there anti-phishing programs like “avast!” and “Google Safe Browsing” that check pages against potential threats.

Do not open or download any attachments from suspicious or unknown domains. Hackers often use personal information on social media to create the illusion that they’re either existing or potential clients.

Only send password-protected, encrypted documents when files are shared with client over email.

Always back up sensitive data, preferably in a secure external server.

Develop a detailed security plan for clients.

The rising popularity of Cloud Computing

These simple IT solutions for accounting firms won’t replace a secure network and infrastructure. Managed IT for CPA businesses is an investment that will protect a firm from an attack of any kind.  As a result, any accounting firms are choosing to adopt cloud services for CPA firms specifically due to regulation requirements.

Cloud computing has become a strategic investment for many accounting firms. It has real-time responsiveness, a secure and scalable infrastructure, and a multitude of services that adapt to industry specific requirements. Additionally, the cloud helps develop a security plan to ensure an accounting firm complies with the safeguard rule.

The standard for cloud accounting service providers is maintaining compliance. Cloud compliance is the principle that cloud providers must be complaint with standards that the cloud customer faces.

Working in the cloud gives organizations flexible, convenient and secure solutions but it also requires working closely with the cloud provider and IT services team. All cloud providers have something called a Service level agreement.  SLA’s cover things like quality of service, availability and responsibilities of the cloud provider . That is to say, it’s a contract between the cloud provider and the client. Look into SLA’s if and when choosing a service provider.

There is a rising emphasis on data security and protection, as we discussed in the opening paragraph. The cloud is a helpful opportunity to advance your IT infrastructure. Make sure you’re doing everything you can to secure your client’s sensitive data.

If you have any further questions, Contact Us and we’ll be sure to answer them swiftly!