Four in 10 financial services firms see US tax reporting requirements as having a significant impact on their business operations, and many entities are reluctant to work with US citizens outside of the US as a result.
The burden of compliance will only become heavier for the industry as we see the introduction of the Automatic Exchange of Information and its Common Reporting Standard this year.
Much of the issue lies in the greater amount of data that must be captured from clients to satisfy cross-border tax reporting. Investment in technology is key.
Paper-based systems are being replaced by digital servicing, a move that will take the strain off the back office, but importantly make the process swifter and easier for clients, as well as boosting efficiency for partners on the frontline.
Transparency and engagement
Better quality data collation and management builds the foundation for companies to move towards digital solutions, feeding through into a better experience for advisers and clients throughout their customer journey, and supporting personalisation.
When combined with investment in accessible and simple digital platforms, client reporting such as evidencing suitability becomes much more efficient and user-friendly.
Looking ahead
Self-service and the rise of automation: The ability to self-serve will be increasingly embedded in the propositions of providers. Two-thirds of affluent individuals expect future wealth management and planning relationships to be mainly or entirely digital.
The development of real time dashboards that can be accessed online or from apps will help meet this need, providing clients and their partners with easily accessible performance data of the investments underlying their policies and their allocation, wherever they are in the world.
Automation provides the potential for disruption and innovation. Greater automation in back office processes will improve efficiency for providers and their partners. Consumer demand for digital advice models will see significant change across the industry.
Nevertheless, the complexity of cross-border wealth structuring will still require the input of multiple human parties, whether lawyers, financial planners or providers. In such a specialised field, technology needs to complement, rather than replace, expert advice.
Hybrid models are likely to grow in prominence, therefore, automating more simple tasks and decisions, but incorporating human intervention at the appropriate points in the advice process.
The future is secure: As firms incorporate digital strategies into their propositions, and the quantity and quality of client data being held improves, the need for robust security becomes even greater. Clients expect no less.
According to CapGemini, 51% of HNWIs now rate theft and personal financial crime as one of their top concerns, so digital security must provide reassurance. Firms will need to demonstrate their commitment to security throughout their systems.
We expect to see greater investment in sophisticated detection and monitoring software, but also in biometric technology to protect clients’ account access and transactions.
