I know a great shortcut...

One of my guilty pleasures in sales is the opportunity to bring an enthusiastic expert to meet one of my prospects experts and to listen to them riff at a level way above my level of understanding. Irrespective of the complexity, enthusiasm compels you to concentrate and as a result there is usually a nugget of knowledge which I can simplify and use in the future. (Clearly another guilty pleasure is a creative license with words, of the actuaries, economists, investment experts and software experts I’ve worked with I don't think any have actually riffed!)

That pleasure was indulged by a recent episode of the Freakonomics podcast where the contagiously enthusiastic expert Marcus du Sautoy, Simonyi Professor for the Public Understanding of Science, spoke about how humans should embrace shortcuts! Wealth management is an industry full of shortcut potential, which if embraced now could be in standard practice in time to deliver further commercial gains once the sector's M&A slows and the furore of pension freedoms settles into BAU.

There are two barriers stopping this happening. The first obstacle is easy, it is to overcome the negative connotation of the word shortcut and look to use them more often. We all use shortcuts everyday, from direct debits to pay our bills, to search engines, the apps on our smartphones and even the acronyms I used in the previous paragraph. Shortcuts are about embracing patterns and processes that can be repeated easily to save you time, or reusing someone else's learned experience to make sure you don't repeat the same mistakes or can progress through the basics quicker, they are one of the foundations of efficiency.

The second obstacle is much more difficult, because it involves getting out of our own way! In 1990 Harvard Business Review magazine published an article (which I found via a shortcut, thanks Google) titled ‘Reengineering work: Don't automate, Obliterate’ in which it suggested that established firms were leaving existing processes intact and simply using computers to speed them up. 30 years later and this approach is still evident through the phrase ‘this is the way we’ve always done it’ and through observation of some wealth management firms who are still struggling to make material efficiency gains even after the adoption of new technologies. After three decades of technology making old ways of working faster it’s time to change, obliterate the obstacles and shortcut to the future of wealth management.

Thinking, making, doing

I dipped back into the podcast with Du Sautoy for inspiration on which activities would benefit most from shortcuts and was delighted by a reference to Aristotle and in particular two of the three basic activities of man: Poiesis and Praxis. Poiesis being the performance of tasks that you need to perform - that are a means to an end, and Praxis the performance of tasks that allow one to display excellence. Bringing the third of Aristotle's basic activities into consideration allowed me to draw a parallel with the core activities in wealth management. 

The third basic activity of man is Theoria, the act of learning, research and theory. We might translate this to ‘problem solving’ which is undoubtedly considered a mainstay for wealth management professionals such as analysts, advisers, investment managers and other technical specialists. Poiesis would naturally cover activities such as administration, paperwork, reporting and implementation with Praxis being the opportunity to articulate the value of work done, be that a research note for internal teams, a portfolio's performance or a financial plan. 

Adoption of new ways of working happen fastest when there is a clear personal gain for those involved - using shortcuts to reduce time in problem solving or completing administrative tasks gives us time back to focus on articulating the value of our work. However, those who love ‘problem solving’ activities might argue that this is not a place for shortcuts, critical thinking is a key USP of the business and they may also argue that problem solving is the most enjoyable part of their role. I would totally agree were it not for the already widespread use of third party research, ranging from economic and capital market predictions through to fund research, and the growing use of quantitative models and tools for functions such as asset allocation or risk management, the use of which suggests there is room for more.These shortcuts allow the thinkers to solve more problems more quickly and with greater confidence, but in wealth management a problem solved in secret has no value. It is the articulation that the problem is solved that carries the most value and delivers the greatest satisfaction - that is the ‘Problem Solvers’ Praxis.

A shortcut? Or just a better way?

Wealth management's traditional high-touch service has been obliterated by the pandemic and this has created a greenfield opportunity for both the front office professional and the end investor to agree on the ideal service proposition. The solution could be any combination of face to face or digital meetings, self-service, high-touch or somewhere in the middle or, if technology were openly embraced, a fluid blend of always-on content and easily accessible experts. Whatever the conclusion, doing away with the ‘this is how we've always done it’ mentality allows for the future to be one of exceptional value for money.

Administration, paperwork, reporting and implementation are assumed to be the easiest areas to deliver shortcuts in order to create optimal value and indeed some functions such as postcode lookups, automated ID&V, electronic signatures and digital portals are equitable shortcuts in that they deliver real value to both the client and the wealth manager. But there are other activities relating to client service where there is a fine line between a shortcut and an offload and firms must tread that line carefully. Equally there are a number of processes perfect for extirpation that firms are clinging to as a central tenet to their value proposition, where instead its an old process getting in the way of progress. 

Embracing shortcuts by openly recognising their benefits and eagerly adopting their new ways of working will bring greater operational efficiency and value for money to the wealth management industry, a new year is a great place to start. (and if you want a shortcut to a stocking filler try “Thinking Better The Art of the Shortcut” by Marcus Du Sautoy)