Secure Client Portals:The Digital Shift Driving Wealth Management We take a look at the most important issues to

consider when influencing the development and

necessity of wealth management portals

2 SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

introduction

The demand for digital interaction from wealth managers has hit an

all time high. The global HNWI wealth landscape is forecasted to top

$70 trillion by 2017, growing by 7.7% annually from the end of 2014

through 2017. By now, customers are used to instantly accessing their

information 24/7 on almost any device; investors expect the same from

their wealth manager.

According to an article on Citywire.com, when it comes to investment

decisions, 30% of respondents expressed a preference for traditional

phone and mail interaction with their wealth managers but 57% still

preferred digital interaction. So, as far as managing their wealth goes,

customers need to strike a balance between regular meet-ups with

their wealth advisor/financial planner and securely reviewing their

portfolios, receiving client reports and sending messages through the

Web.

In this white paper, we take a look at the most important issues that

have influenced the development and necessity of wealth management

portals, including:

The generational shift of investors from Baby Boomers

to Millennials

The rise of digital reporting

The necessity of bank-grade security

The pressure to meet client expectations by providing

the best possible user experience with the latest

technology

3SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

Four Big Millennial Myths Debunked

Capgemini’s 2015 United States Wealth Report states that most under-40 HNWIs noted they already conduct most of their wealth management

through digital channels. This is twice the amount of over-40s.

A large portion of this under-40 group is the generation of Millennials or Gen Y— the demographic born between the early 1980s and 2000s. They have

been key in driving the digital impact across all industries.

Move over Baby Boomers. the Millennials are the new wave of investors shaping the future of the asset management industry.

By 2020, Generation Y and Generation X (those born between the mid-1960s and the early ‘80s) will represent 60% of the global workforce, according

to PwC. As consumers, their demands are different from the generations that have gone before, and the financial providers in particular will face new

challenges in figuring out how best to serve these tricky unique customers.

But there are some prevailing myths about Millennials, which we first need to debunk:

Millennials are the entrepreneurs and business leaders of the future. They haven’t had

everything handed to them on a plate like the Baby Boomers did. They had to pay for

further education, and are struggling to get on the property ladder

They are working for themselves or building start-ups, using new methods such as

crowdfunding to finance their ambitions in a time period of limited bank lending. They

won’t become millionaires overnight, but they will be the clients your business wants for

years to come.

1 They don’t have any moneyHNWI are conventionally portrayed as only casual users of digital technology, but Accenture’s research contradicts that expectation, finding instead that 83% of HNW respondents use digital for financial services and 41% regard themselves as early adopters of technology

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4 SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

They do want to engage, but in different ways. It’s no longer enough to send a quarterly

fund report in the post; these consumers want real time information and one-to-one

contact with a real person in real time. They are accustomed to doing everything through

their smartphones, tablets, and laptops, and they expect to manage their finances this way

too.

Aberdeen’s head of corporate communications James Thorneley said: “Anecdotally, I

would suspect Millennials will want far more accessibility and will want to interact via

their mobile handset rather than waiting for a six monthly statement or being placed in a

queue at a call center”.

Almost half of Millennials in the US (47%) have started to save for retirement, according to a survey conducted last year by Fidelity

Investments. The Millennial Money Study, which surveyed more than 1,000 adults in the US aged 25 to 34, also found the top three

issues Millennials are trying to tackle are: They are accumulating more savings for retirement (52%), pay off credit card debt (41%),

and pay off student loans (28%).

So the intention is there, which is half the battle, it’s just that many Generation Y-ers are weighed down by debt.

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They aren’t engaged with financial matters

They aren’t saving for retirement

More than half of HNWIs aged 40+ would consider leaving their firm if an integrated channel experience is not provided.

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5SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

It’s true that they’re not loyal to a particular brand for the sake of it, or because of inertia. They are willing to switch between service

providers if they see a benefit in doing so, and this process is becoming easier (note the fierce battle raging in the banking sector to poach

each other’s customers through one-off incentives). One in three Millennials say they are open to switching banks in the next 90 days and

believe they won’t need a bank in the future, according to PwC.

Interestingly, Millennials aren’t tied to the idea of only buying products from traditional financial brands. They are happy to entertain

newcomers – tech firms, challenger banks, supermarkets – even where there is no demonstrable performance track record.

Does this make them fickle, or simply more discerning consumers?

The financial services sector is already changing rapidly to accommodate the demands of the next generation of consumers – the rise of

roboadvice is a clear indication of this.

4 They are fickle

Who wants paper from their wealth management firm?

In most markets, customers are charged to upgrade when new services become available, but in the investment business, this model has been turned

on its head – investors who want paper-based statements and reports, rather than opting for access to newly-launched online platforms or portals, are

increasingly being asked to pay for the privilege.

Asset managers prefer digital communication channels partly because they are cheaper to maintain. But for many firms, the allure is more about the data

that online communications offers – an almost endless supply of information on what their customers are interested in, how they move through a given

investment process and which products and services they might buy.

6 SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

Still, while that might be attractive, it’s fair to say that the asset management sector has not been at the vanguard of digital adoption. One report,

published by Create Research earlier this year, described the pace of change in the industry as “glacial”.

Accenture’s report into digital transformation in the asset management sector lists six different themes that require a response:

What does this mean in practice for asset managers?

The short answer is they must do much more than simply offer clients access to online communications about their investments as an alternative to paper

statements. Investors want platforms that allow them to connect their accounts so they can see their assets in the round. They want sophisticated digital

tools that enable them to analyze risk and return in a variety of different ways. They want access to new asset classes – whether recent developments

such as crowdfunding or more established investments that were previously the preserve of the institutions, such as alternatives.

Bill Doyle of Forrester Research believes traditional asset managers are already losing ground to firms able to provide these services – and more. “The

same forces of digital disruption that upended music, travel, and news are now coming for retirement, wealth, and asset management,” Doyle warned in a

Demographic change – increasingly tech savvy portfolio managers and clients want to conduct business

primarily through digital channels;

The rise of low-cost providers – the emergence of cut-price models requires traditional asset managers to prove

their worth;

Emerging market growth – investors in these markets are very often more likely to rely on mobile technologies;

Regulation – regulators have not kept pace with digital technologies in financial services and firms that fail to

engage with this challenge may not be able to realize their ambitions;

Risk – in a volatile but low-interest rate environment, the challenge is to deliver a reasonable level of return

while managing risk;

Brand and reputation – clients and advisers influenced by social media and digital channels must be courted

through these routes

7SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

recent Forrester report. “Standing on the shoulders of other recent

disruptions in retail investing – low-cost index funds, exchange-

traded funds, deregulation, and the Web – digital disruptors are set

to transform the industry.”

Staying safe from cyber-attacks

Cybercrime is on the rise, with a number of high profile hacks

making headlines. JPMorgan Chase suffered a major data breach

following a cyber-attack towards the end of 2014, and investigators

report that hackers also tried to infiltrate nine other financial firms

including Fidelity Investments, Citigroup and HSBC.

Cybercrime, as the name suggests, is crime committed via the

Web, and can include infecting companies’ servers with viruses,

bombarding websites with huge amounts of traffic in order to crash

them, ‘phishing’ for data by sending bogus emails, or ‘pharming’,

which involves redirecting a website’s traffic to a fake site and then

stealing users’ details.

It accounted for 39% of economic crime experienced by the financial

services sector in 2014, compared to 17% in other industries,

according to PwC.

Due to financial firms becoming more vulnerable than other firms to

cyber-attacks, it is not surprising that financial regulators have been

paying close attention to this worrying trend.

The COOConnect survey also revealed that 70% of managers did not feel adequately prepared to deal with a cyber-threat. Just 27% of managers running in excess of $1 billion in Assets under Management (AuM) said they had appropriate safeguards in place to mitigate the risk of a cyber-attack

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8 SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

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Do you utilize robust, a well-documented program to

monitor cyber-risks?

How many times has the business been the target of a

high-level attack during the past year, and how far did

it reach in system?

How many times has the business been the target of a

high-level attack during the past year, and how far did

it reach in system?

Does the bank have any third-party vendor oversight?

If so, what kind and how much?

What is the bank’s readiness with respect to the NIST

framework?

How does the bank ward off phishing and diminish

the likelihood of having data compromised from an

internal breach?

How do you measure the exposure and report on

cyber-risk?1

S&P considers cyber-security in bank credit ratings

Standard & Poor’s recently said it could even downgrade banks with

weak cyber-security. They put together a list of 16 questions to ask an

asset manager how prepared they are to deal with cyber-attacks:

9SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

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How long has it typically taken to detect a cyber-

attack?

What containment procedures are in place if the bank

is breached?

Are emergency scenarios test-run?

What software or other techniques are used to

monitor attacks?

What kind of expertise about cyber-attacks exists on

the board of directors?

How much does the bank spend on cybersecurity, and

what resources does it devote? What is the total tech

budget this year versus last?

What are the bank’s capabilities versus peers, and

how are they assessed? Is there information shared

with peers?

Does the bank have any insurance to compensate for

a cyber-attack?

What’s the internal phishing success rate?8

Despite the increasing frequency and severity of cyber-attacks, the budgets allocated to information security have actually gone down by 4% in the last year. The proportion of the IT budget invested in security accounts for 2014 is just 4%

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10 SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

Sadly, cybercrime is an indelible feature of the new digital landscape FS firms are navigating. While trying to create innovative online solutions for their

customers, they face the additional challenge of guarding their clients’ assets and information from increasingly ingenious criminals. This is a huge

financial burden, especially for small firms, but seems unavoidable. The cost (financially and reputational) of a successful hack would be much higher than

a robust prevention strategy.

Secure portal technology: 10 Essential factors to consider

According to our survey on digital marketing practices in asset management, respondents revealed that secure client portals are the second most

important distribution method for enabling prospects and intermediaries to access a firm’s data. But what makes a good one? We’ve put together list of

what we feel are ten of the most important considerations to ponder when looking for a best-in-class secure portal solution for wealth management.

Bank-grade security

Great Design

With third-party IT vendors coming under increasing scrutiny from financial

regulators, it’s critical that client data is secure. Vendors should have information

management certification such as the ISO 27001 accreditation.

From a user interface perspective, two-factor or multi-factor authentication

should be seriously considered, the same tech used with your online banks.

Beautiful design is everywhere. We come across it every day from using online

services like Netflix to placing a bet on the horse races. Wealth management is

no different and users are expecting great web design wherever they go. Robo-

advisors are leading the way with some awesome web design.

ISO 27001 - According to a survey of 260 respondents by IT Governance in 2013, 87 per cent said that they knew of the standard, but only 35 per cent were actually compliant with it.

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11SECURE CLIENT PORTALS: THE DIGITAL shift driving wealth management

User Experience

User Permissions & Emulation

Mobile Friendly (through responsive design)

On-the-fly digital client reporting

With great web design should follow a great user experience, but they are not the same thing. The best user

experience can often be achieved through good research – what are your users looking to do. Does a wealth

dashboard look pretty, but fail to deliver in terms of usability? What areas of a website are your users not

using?

Secure Portals need to cater to an array of user types. Asset and wealth managers deal with intermediaries,

investors and institutional clients – each with different needs. A good secure portal should allow

permissioning and entitlements as well as the ability to emulate these users from administration level.

We feel the age of responsive design is here to stay – smartphones and tablets are leading the way in terms

of user engagement. Enabling users to have a great experience on mobile devices is another expectation, and

not just with the Millennial generation.

As we alluded to earlier, going paperless is becoming the norm. End clients expect the ability to generate

reports on demand, with the latest data. The ability to generate high-quality PDF reports as well as Excel or

CSV format for statements for holdings, transactions, distributions and commissions.

Associated Documents

Interactive Charting

Multiple Currencies

CRM/Marketing Automation integration

Displaying associated literature is an important requirement for a wealth portal. Quarterly/Monthly Portfolio

Valuation Summaries in PDF format are just one example that users should be able to access easily.

Users expect interactivity with charts – the ability to play around with timelines and benchmarks. A good

charting engine is a vital ingredient for both improved user experience and that ‘stickiness’ factor.

Secure portals for fund providers or administrators often require the ability to display financial figures in

multiple currencies. A currency dropdown built-in to the portal improves user experience and becomes an

indispensable feature.

Marketing teams need to integrate all user touch points into the platforms they are using to track and

analyze metrics. Think about CRM integration to push user data into, and marketing automation to track user

behavior and trigger actions such as email notifications, point scoring and other marketing based automation

rules.

6 Elements of the Perfect Secure Portal [INFOGRAPHIC]

CONCLUSION

After about 13 years in existence, the concept of a Secure Portal in the asset management industry is reaching its first cycle. Many firms are now

considering the next generation portals — influenced by the rise of Millennials, the trend of going paperless, the need for bank-grade security and the

requirement to provide clients with great user experience — and their portal strategy. Here at Kurtosys we are at the forefront of this change: We plan to

ensure that our clients not only save a great deal of time and money, but also achieve the higher goals of providing client stickiness, brand affiliation and a

culture of transparency through a beautiful digital experience.

Even the wealthiest HNWIs are demanding digital, with over half (55 percent) of those with over US$20 million in investable assets and three-quarters (74 percent) of those with US$ 10-20 million expecting a largely digital wealth management relationship in five years.

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about us

Kurtosys is a global provider of digital marketing and client

reporting tools that help asset managers attract and retain investor

assets. Since 2002, our team of industry experts has been using

digital media to transform the way that financial information is

presented, shared and consumed.

Kurtosys offers a broad range of fund marketing and investor

servicing solutions – from Fund Factsheets and Fund Websites to

Client Reporting and Secure Portals.

Headquartered in New York, Kurtosys has offices in London, Cape

Town, Reno and Gurgaon (India). For more information, visit

www.kurtosys.com and subscribe to the Kurtosys blog, or follow us

on Twitter @kurtosys.

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