Wealth Management Firms Lack Comprehensive 'Onboarding' Process

Advisors risk increased client attrition, missed growth opportunities and regulatory peril

More than 70% of wealth management firms’ view client onboarding as either a back-office function that needs to be cost-contained or a front-office automation tool, according to a new report from Aite Group. Only 30% view client onboarding as a competitive differentiator. 

As a result, firms are missing opportunities by solely focusing on improving automation at the account opening stage. But Aite Group claims the onboarding process is an opportunity to deliver "a differentiated experience to new clients." 

“Delivering a high level of service to clients is particularly important during the new-client onboarding stage,” Sophie Schmitt, senior analyst with Aite Group and author of the report, said in a statement. “This is when clients are forming their first impressions of the firm and have momentum to make changes in their financial lives.”

The report also discusses the path that firms should take to implement a mature onboarding process, characterized as “intelligent and responsive.”

"Firms operating at this level of process maturity are able to leverage client information to react to operational errors and relationship deepening opportunities as they occur," the report states. 

The study concludes that firms at the process maturity stage benefit from in two ways: they have shorter account-opening cycle times than firms that have lower levels of "process automation" in their onboarding process; and they are able to deepen client relationships and increase revenue during that process.

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