Transforming Wealth Management Platforms

This White Paper is intended to provide insight into how Wealth Management organizations might transform their legacy systems and processes into a modern Wealth Services delivery platform. The information provided assumes the reader has some general understanding of Wealth Management and Fiduciary Trust. The following information will be discussed in this paper:

• A brief biography of the author(s)
• The driving factors leading to a provider review
• An overview of the vendor selection process
• The Culture debate – Managing the emotion and fear associated with change
• The Conversion – The Essentials
• Overview of a successful Wealth Management Transformation
• Summary Observations

Author(s)

Russell Morse worked for a large Wealth Management firm in Texas from 2000 to 2021. In his 21 years at the firm, he held the positions of Daily Valuations Manager, Manager of Trust Systems Administration, Manager of Fiduciary Tax, Manager of Securities Processing and Director of Trust Operations. In this position, Russell oversaw all significant Fiduciary Trust and Wealth Management Projects. Prior to joining this Wealth Management firm, Russell was a partner with an Employee Benefits Consulting Firm. He has first-hand experience in Wealth Management Operations and supporting systems as well as Registered Investment Advisor (RIA) operations and supporting systems. Russell was the primary architect of this Texas firm’s successful conversion to the Fi-Tek GWES system (live summer 2020).

Driving Factors

A business case detailing cost savings, increased revenue and risk mitigation needs to be prepared by stakeholders and reviewed by executive teams. There may be a line of business that can’t be properly supported by current platforms. There may be sales opportunities recently lost due to system constraints. These need to be included in the business case. Utilizing a legacy system can stretch the profitability of a Wealth Management department given the operational, system and administrative efforts required to make the system work effectively. Automation and incremental revenue can be realized through a system conversion from a legacy system to a more modern system. An argument for cost reduction (staff reallocation) or increased revenue (more customers) needs to be clearly articulated. A change in technology is never easy. Oftentimes there is a loyalty towards an existing system provider, especially when there has been a long-term relationship. Decision makers may be slow and methodical in moving away from the known to the unknown. A documented business plan detailing the costs and benefits of a system change is essential.      

Vendor Selection

If a vendor review is approved by Executive Management (based on business case), then the next step is to determine the resources needed to effectively perform the review. A Wealth Management firm may choose to create their own Request for Proposal (RFP) and build their own vendor scoring process. If internal resources aren’t available for these efforts, then there are many consultants who are able to help. The RFP should be distributed to all major providers of Wealth Management Systems and they each should be invited to demonstrate their capabilities to stake-holders. In addition, auditing each provider’s annual user conference may provide clarity regarding the level of satisfaction of their current clients.

Your RFP process may take a considerable amount of time (up to 12 months from start to finish). The time requirement may be shorter if consultants are brought in to assist. 

Culture

Risk taking is a part of all successful businesses but always must be taken with an eye towards the safety of existing customers. Having a conservative culture breeds a healthy aversion to change.  Even when change is a step towards success, there are many employees who will challenge and/or question the effort. 

It’s important to choose the right “Project Manager”. A veteran, long-term employee who has experienced change within your organization is your best bet. It is essential that this person understands and appreciates the culture of your organization and appreciates the emotional toll that a change of this magnitude will have on your employees.  

It’s important to create a group of project participants (Core Project Team) composed of both disruptors and contributors. Your “disruptors” are those employees that are never satisfied with the current environment. They crave change, even if they can’t articulate their desire. Your “contributors” are your peace makers. They compromise and accept the tools they have. Make sure these Core Project members all want the “best” outcome for the organization and are introduced into the project as “equals” (all having a vote in the decisions being made). Not all of these are going to be your typical “go-to” people for smaller projects. Working with Human Resources and Marketing to identify the Core Team can be instrumental in achieving success.

The job of the Core Project Team is to make decisions regarding the transformation and to communicate these decisions. They keep the information flowing to all level of stakeholder. Their Secondary role is that of “Cheerleader”.  They identify anyone who is feeling overwhelmed by the change effort and help them to overcome their fear and negative emotions. 

Conversion

It is essential to require all stakeholders to participate in “trial conversions”. Vendors may suggest two trials – they call this “standard” – but push for more. System configuration (asset and account settings) is an ongoing and ever-changing effort. Even post-conversion there may be second thoughts and setup regrets. A third or even fourth conversion trial will help to solidify decisions regarding system configuration. 

Don’t hesitate to setup and fund a test custodial account. This allows you to test trade and settlement procedures prior to live date. It may require an initial funding of the test account, but it is well worth the investment.

Training is key. While the cost and effort of training is significant, the payoff is huge. Provide every opportunity for your employees to learn how to use the new system before “live-date”.

Hold everyone accountable for learning the new system and procedures. Create a sign-off process where all end users attest to the fact that they have attended training and understand how to perform their role on the new system.

Overview

To have a successful transformation, you need the support and buy-in from the top of the organization. The Core Project Team needs to keep the Executive Team informed of all successes and challenges at each step of the process. The Core Team also needs to be empowered to make high level decisions regarding how the system will work.  Communication is key but can’t replace training, practice, and testing.  

Summary Observations

• Make very deliberate decisions about the future of your organization prior to starting the process without influence from vendors
• Choose the right internal leader to “beat the drum” and keep making progress
• Determine what you can do internally and where consultants can add value
• Invite open minded individuals to participate in the project and allow them to make decisions
• Empower the Core Project Team to execute without management pre-approval 
• Never underestimate the fear and reluctance your employees will exhibit
• Never underestimate your employees’ ability to rise to the challenge of change
• Communicate. No matter how insignificant a decision might seem to you, your employees want and need to hear about it
• Feed the project team well. Breakfast, lunch, and dinner. Meals are an opportunity for the team to decompress and share ideas about their progress
• Spend the dollars to properly test and configure the system. Use the test system as an opportunity to train your employees.  This is not the place to cut costs