EXCLUSIVE: Wealth managers need to look to retail sector to learn to embrace ‘omni-channel’ services, Douglas Orr of Novastone told PAM Annual Finance Dinner
08:04 GMT , Tristan Blythe, Group Editor
Read the article on : www.thewealthnet.com
The wealth management sector needs to learn from the retail sector and how it has embraced an “omni-channel”, according to Douglas Orr, founder and chief executive of Novastone.
Mr Orr told diners at the inaugural PAM Annual Finance Dinner earlier this week (09/06/2015) that he was a “serial entrepreneur” and that before creating Novastone, which aims to provide a safe method for wealth managers to communicate with clients (see thewealthnet 02/03/2015), he had worked in the retail sector.
“Before I built Novastone, I built the UK’s leading provider of online pricing intelligence in the multi-channel retail sector,” he said. “I started the business in mid-2000s and sold it to GFK in Germany last year.”
The firm worked with a range of clients, including some that succeeded in embracing online sales and embedded it into their overall strategy, such as John Lewis. Others, such as Woolworths, failed.
Many had an online department “not because they loved the idea, but because they felt they had to.” At the time many did not know how to compete with the new and emerging online retailers.
But one of the common themes amongst those firms that did not succeed was that they often had a high number of “fixed assets” such as long term leases on real estates. This “distorted decision making” and forced them to fight against the online channels in favour of the ‘high street’ retail model.
John Lewis succeeded because it innovated and made the online and high street models truly integrated, Mr Orr said. It realised the experience, and price, needed to be the same whether the customer came to the store in reality or in the digital world. This ‘omni-channel’ approach proved a success, to the extent that in 2010 online sales overtook sales in stores and in 2013 sales from mobile devices overtook online sales.
As a client of the wealth management sector for 15 years and now providing it with a service, Mr Orr said that are similarities between it and the retail sector. Wealth managers also have a high level of fixed assets, namely the high cost of staff and the need for offices.
However, the wealth management sector faces a high cost and burden with regulation. On top of this the realisation of the insecurity of email, and the corresponding need to increase phone contact, means that the cost of engagement with clients has increased.
Mr Orr added that the sector also had benefits when it comes to engaging with clients, namely long established brands and long term client relationships.
To build on these strengths the sector must provide ways for clients to fully interact via mobile devices. “My phone is the remote control for my life in every other area, and you need to think of it as such in wealth management,” Mr Orr said. If wealth managers and private banks do not embrace a seamless, integrated, omni-channel model then clients will turn away from the traditional firms and embrace the new online investment services such as Nutmeg, he argued.
For those based in London, they have an additional advantage, Mr Orr added. As well as being a leading centre for wealth management, it is also a leading centre for Fin Tech with a lot of innovative firms being established, he said. These two sectors need to work together to ensure private banks can adapt to modern way clients interact with their service providers.
The inaugural PAM Annual Finance Dinner for wealth manager CFOs (or the like) was held at The Goring hotel in Victoria, London. The Dinner was attended by nine CFOs, four speakers, one chair and the managing director of PAM Insight, Ed Hicks. The evening was kindly supported by Deloitte. It was chaired by Jonathan Ayres, CFO of C. Hoare & Co.