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Magazine Issues » April 2022

Roundtable: Achieving personalisation at scale

Funds Europe – Is there a danger that we’re over-exaggerating the demand for personalisation, particularly in the institutional space?

Gillan – No, I don’t think so. The demand for personalisation is coming primarily from our direct consumer arm but ultimately our institutional clients are serving investors and they will react to that demand. In the UK, there is a definite trend towards a much more heavily digital experience. The advice market in the UK has this very traditional image, but you’re going to see a world where robo-advice will increase in importance. That is not going to remove the need for face-to-face financial advice. Nevertheless, that face-to-face financial advice is going to change.

Rather than going in with lots of forms and pieces of paper, it’s an adviser walking into a client with an iPad to complete their risk profile questionnaires. Everything will be done digitally, from the initial piece of advice all the way to the execution of the client’s portfolio, so every institutional firm involved in that process eventually will have to move on this journey as well.

Wade – There is already a personalised element in the institutional market in the form of separately managed accounts and bespoke time horizon-led products, but the ticket size to get access to that service is in the tens of hundreds of millions of pounds. So, how do you take that ticket size and bring that down to single-digit millions or even hundreds of thousands for an investor through the use of new infrastructures and technology?

Tummala – A lot of assets are managed at the institutional level today and the share of direct personalisation is probably going to increase. And the share of modern digital distribution platforms that service end users or end consumers is going to be vast. As a consumer, we ask ourselves, ‘Do we place all our wealth needs with an institution and allow them to manage them?’ or will we have a couple of accounts that use robo-advisory to do the same thing as/when they become available?

Today I have less than 5% that I directly manage, but as the robo-advisers and segregated managed accounts and everything else, as the ticket sizes change, I will be shifting a bit more of my wealth management requirements into these platforms. That’s the natural flow and that’s where both the challenge and the opportunity are there for an asset servicer.

Funds Europe – What is the most important priority for achieving this personalisation at scale?

Gillan – When it comes to tokenisation and removing intermediaries, there are two challenges. One is just sheer inertia. The other would be a lack of a harmonised approach. There are a lot of people who are not going to change until there is an industry standard or something approaching an industry standard.

When it comes to tokenisation, developing an industry-wide, standardised approach enables asset managers, manufacturers and distributors to get comfortable with that change. If you look at the typical value chain for a fund with a number of players that are involved in there, every intermediary in that chain will justify their existence. They are all there for a specific reason and for any link in that chain to be removed, people will need a lot of confidence in that technology. So, that standardised approach will be very, very important.

Wade – With the industry that we’re in, engagement with the regulator at the right time in the right way is the way that these things move forward. To do that, you need a minimum viable network of actors, so you’re closely defining the functions needed to make this work and therefore which of those can be assigned to technology and which of them need a regulated actor performing that function. Then it is about how you choose the infrastructure that operates this technology, making sure that you choose the one where the network is already established and embedded, and the technology is able to scale to the level of a market infrastructure.

Tummala – There are a few different versions of the future. You could have these massive industry-scale utilities that are driven by huge tech capabilities that enable you to service a lot more, or you could potentially have more minimum viable ecosystems succeeding by using this infrastructure as intermediary construct so that you can meet different kinds of customer requirements and outcomes. The truth is going to be somewhere in between, but I am more in favour of having a lot more minimum viable ecosystems actually working towards helping the end clients achieve their multitude of goals rather than having five large industry-scale players.

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