Efficiency

manager, SunGard's wealth management business

Technology that can make a difference in client services

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Communication is such an integral part of what it means to provide a meaningful client experience. When we speak, write or otherwise misconvey our true intention, however, it is difficult to understand why a problem does not get resolved. Technology has helped everyone to be more available and productive. However, that same technology also has caused us to stray away from natural methods for interpreting interpersonal communication.

E-mail, issue tracking systems, Twitter, FaceBook and LinkedIn all rely on typed words for communication.  According to A. Barbour, author of the book, Louder Than Words, it is our non-verbal communication that determines the interpretation of the words spoken. Barbour breaks down non-verbal communication into the following: 7 percent verbal (words), 38 percent vocal (volume, pitch, rhythm, etc.), 55 percent body movements (mostly facial expressions).

With the continued drive to embrace and leverage technology, we need to look for ways to make it support more personal and interactive methods of communication. One such method is interactive video, which is becoming the preferred communication method for international departments. Skype, FaceTime, GoogleTalk, WebEx and other instant messengers also give individuals the ability to visually communicate. These technologies provide the interpretive assistance we need so our senses can to go to work and help enhance communication clarity.

Recently, Cisco’s WebEx application began leveraging video in its online collaboration software. SunGard implemented this upgrade, which allows for up to six participants to be seen at a time and interact. Through the sharing of desktops, this type of technology continues to help us see what problems exist and allow WebEx participants to communicate issues better.

Although the technology exists, nothing in the marketplace indicates a movement toward choosing video calling over e-mail or some other Internet-based messaging service. On the contrary —a recent InboxQ survey reported that 64 percent of the people surveyed would rather buy or do business with vendors who responded to queries via Twitter. It seems that people would rather communicate through the written word rather than in person (video). People are self conscious about being seen through a webcam. I recently polled a sampling of our own client services team about leveraging video; only 2 of the 20 polled indicated they would do it. The others — 90% —did not want people looking at them. When I asked if they would be open to adding a service like Twitter to answer client issues, a majority of the team liked the idea.

Embracing emerging technologies like Twitter early could help you retain clients, but it may take more time to leverage video. An option could be to introduce a social media outlet initially and use video conferencing for presentations. As the employee’s comfort level increases with video look at implementing on a more granular scale.



Have you implemented any new technologies, such as Twitter or interactive video services, to help enhance communications with your clients? How was your implementation experience, and what effect has it had on your client interactions and productivity?

senior vice president, advisor and investment solutions, SunGard’s wealth management business

Offering retirement income planning: Addressing the obstacles and challenges

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Retirement income is getting a fair bit of industry attention these days, as it shifts from being a niche segment of the wealth management industry to become a driving force. However, retirement income planning is still in its infancy, and no one is quite sure where it will end up.

I see “retirement income planning” as financial planning that focuses on helping clients have enough income during their non-working years to maintain a desired lifestyle for the rest of their life— which is not an easy task.  During their working years, clients have time on their side to recover if the markets move against them. They also have a cash flow from their employment income to cover current expenses.  The situation is different during retirement, when they must act more conservatively to help ensure they do not lose their capital, while still generating enough income to cover expenses. Due to the number of unknown, hard to predict variables, modeling this environment is extremely challenging.

Early on, the industry focused mainly on product development to support retirement income planning, creating a slew of new products that included target income funds, new features on fixed and variable annuities, managed accounts coupled with income guarantees, as well as institutional retirement plan income products. While products will be a key part of any retirement income solution, your clients first need to know how much retirement income they can expect to have and likely to need. In short, retirement income’s challenges will be solved mainly through robust and effective advice and planning.

Some wealth management firms are ahead of the curve, investing substantial sums in their retirement income service efforts. Launching a robust and effective retirement income planning offering is difficult however, because it is different and more complex than accumulation planning. Advisors need to address regulation and compliance concerns, get on board to offer the service, and often include elements such as healthcare and long-term care — factors that many have not focused on before.

Despite all of its obstacles and challenges, retirement income planning cannot be ignored for one simple reason — it is what many of your clients want and need. Ultimately, they will decide where the industry goes. Essentially, they want to know if they are going to be “OK” and will have enough when it is needed.

Are you currently offering robust, comprehensive retirement income planning? How are you addressing this type of service’s many challenges?  Share your thoughts on what the industry needs to do to help.

senior vice president, SunGard’s MarketMap

Market Data: the financial advisor’s cornerstone for enhanced service

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In an uncertain market, financial advisors must constantly prove their value and build client trust.  The ability to do this well relies on being productive, efficient and cost-effective at all times, while giving investors the transparency they demand and capitalizing on change in the industry.

The role of market data in the wealth management industry is growing, as advisors realize the importance of data in enhancing client service, gaining efficiencies and controlling costs. A firm’s market data framework should also be able to support new information and service channels, such as meeting the growing advisor and investor demand for mobile access to stock prices and portfolios.

It all stems from the constant need for data to help advisors with research, price discovery and client servicing.  Clients want better service, and advisors know that higher quality market data will help them drive better decisions, reduce risk, comply with regulations, and facilitate long-term wealth planning.  Asset diversification is also driving the need for global asset class coverage, requiring improved scalability.

Fast, high-quality data is required, but it is not the whole picture.  Seamless access to news, pricing and analysis – integrated with their core platform’s financial planning, asset allocation and trading capabilities – is the best-practice approach for improving accuracy and speed.

Then there’s the cost of data. Market data costs have been rising not only due to asset and product expansion, but also due to inefficient or unnecessary usage.  Firms only want to pay for the market data that they need and use.  By purchasing and centralizing data at the firm level, they can ensure consistency and transparency into variable costs.

Is your market data integrated with your wealth management platform? Is your firm struggling with the cost of market data? Does your current infrastructure support mobile applications?

We invite you to join the conversation via our blog site, or join us for one of our upcoming webinars on Market Data in Wealth Management.

chief executive officer, SunGard Financial Systems

Capitalize on Change

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Wherever you sit or whatever job you do, you’ve just witnessed the biggest change to the financial services industry in living memory.  A wave of regulations, the growth of emerging markets, and revolutionary technologies are not only reshaping the financial services industry; the very pace of change has become quicker. It creates big challenges for organizations. But, with big challenges also come big opportunities.  I personally find it to be a very exciting time. We’re helping our customers capitalize on the opportunities presented by change by helping them increase transparency and efficiency and better leverage networks.

For example, our wholesale finance customers are under a lot of pressure to meet evolving regulatory requirements and accurately measure and report risk. From stress testing to data consolidation to complex calculations, we’re helping our customers capitalize on the changes in regulations. We’re helping them achieve greater transparency into their risk exposures and to create a better risk practice across and at all levels of the organization.

At the same time, improved speed and performance remain the very essence of achieving efficiency. With faster speed and better data management becoming more critical for traders, for example, algorithms and market data are taking center stage. We’re providing financial institutions with multi-asset, multi-market capabilities; award-winning algorithms, and cost-effective market data.

In the space of consumer finance, mobile networks are transforming how our customers service their clients. We’re providing more and more of our solutions on mobile applications, to help our customers connect with their clients across the spectrum of wealth, at any time, in any part of the world.

By embracing the evolution happening all around us, we’re helping our customers capitalize on change in wholesale finance, consumer finance, and corporate liquidity. At the end of the day, change ultimately creates huge opportunities for customers to differentiate and grow their businesses.

When you think about changes in the finance industry, what do you think of first? The impacts of the Dodd-Frank Act and liquidity issues? The move of OTC derivatives to central clearing? Or the rise of the emerging markets and new wealth in the BRIC countries?

We look forward to continuing the discussion on many of these topics online on our TEN web site as well as at our live SunGard City Day events around the world. Please join in the conversation, we want to help you  capitalize on change.

partner, SunGard’s Wealth Management Global Services

Which do you prefer? A lump sum or a lifetime guarantee?

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“If I could give you a choice between 1000 gallons of coffee on the day you retire or a guarantee of receiving 3 cups of coffee each day for the rest of your life after you retire, which option would you choose?” The question struck me as somewhat odd for several reasons, not to mention the fact that I am not a coffee drinker!  However, the real point of the question gets to the heart of the recent interest in retirement income products in the defined contribution plan market.  If you give me 1000 gallons of coffee (or my personally preferred drink of iced tea), how would I know that 1000 gallons would be enough to last for the rest of my life?  How would I take care of that much coffee and keep it fresh?  How much could I drink each day and not run out?  What if I currently average drinking more than 3 cups per day?  Will I be able to adjust to a lower standard of coffee drinking?

The retirement industry has seen numerous changes over the past 30 years, since the advent of 401(k).  For decades, the bulk of corporate retirement plans were based on the defined benefit (DB) model, where a company makes a commitment to their employees of a future specific benefit at retirement.  However, this model creates a future liability for companies and is not always properly managed to remain solvent.  Because of this and the deferred tax provisions of 401(k) and similar plans, companies began moving toward defined contribution (DC) plan models.  Over the next 25 years, participants began to amass large balances toward their retirement goals (the 1000 gallons of coffee model), and participation in traditional DB plans went from 85% in 1980 to only 37% in 2004, according to the Center for Retirement Research at Boston College. DC plans saw the reverse take place, skyrocketing from 38% to 80% in the same time frame.1

A perfect storm occurred in 2008, just as the largest population block in our country (Baby Boomers) began to reach retirement age.  As a result of the economic collapse and the market going from 14,000 to 6,600 in a matter of months, investor confidence toward their retirement was shaken.  People were forced to continue working, if they had a job.  Suddenly individual investors did not feel as invincible as they once had. 

If you posed our coffee question to many individuals in 2007 or early 2008, there would be a much higher percentage of those who would have chosen the 1000 gallons option.  Today however, people are much more inclined towards the guaranteed 3 cups per day for life.  Their 1000 gallons had been reduced, in some cases to less than 500.  According to a study done by Fidelity during the financial crisis, 85% of Americans aged 55-70 placed a higher value on guaranteed monthly income than above average investment gains.2

Retirement income products have been around for a long time.  However, until recently there was not much push towards integrating these products into the DC plans that are offered by employers.  They were often thought of as a post retirement product readily available in the open market through your investment advisor.  These integrated products have a variety of features, but usually have some form of equity investment with a fixed income component that increases as the participant nears retirement. 

Regardless of the product definition, these products generally have features or product rules that can be difficult for recordkeeping systems to administer.  These difficulties include, managing:

  • participant education and communications about the products,
  • the income projection process, including the fixed income component, and
  • the maturity process when the participant begins retirement.

Because of these and other challenges, recordkeepers have been hesitant to get onboard with implementing retirement income products.

Is your organization working to ensure that your clients can choose the security of those 3 cups per day at retirement?  If so, tell us about the challenges you have seen.

Credits:

  1. http://www.towersperrin.com/tp/getwebcachedoc?webc=TILL/USA/2007/200703/Emp2007RetirementFinal.pdf
  2. http://www.businessweek.com/print/managing/content/oct2009/ca20091016_119704.htm