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A New Paradigm Of Personalization – Illusion Or Reality?

Craig Pearson, Private Wealth Systems, CEO, April 8, 2021


Many software vendors purport to offer personalized investment reporting but dig deeper and these claims are often illusory. Craig Pearson, CEO of Private Wealth Systems, explains why the problem, as well as the solution, is structural.

As financial service providers seek to differentiate themselves and defend against commoditization of advice, they are increasing their focus on providing personalized experiences for their clients. Up until two years ago buyers of financial software had to sacrifice personalization in order to drive scale. But when serving ultra-high net worth individuals, one size never fits all.  

Many wealth advisors define personalization as simply customizing the layout and graphics on a consolidated investment report. Private Wealth Systems has pushed the definition much further by empowering each and every individual with total control to group, structure, and classify their data any in way they want, whenever they want. The company’s award-winning data model, which is a first in the industry, allows wealth advisors to engage each individual client based on that individual’s unique personal needs. What this means for an advisor overseeing investments for a family that has a hundred individual family members across generations or several thousand unrelated clients is that the advisor can engage each family member as an individual and personalize the advice, analysis and reporting based on that individual’s perspective. In so doing, Private Wealth Systems aligns the relationship between advisor and investor in a way that has never been possible before.  

For UHNW individuals, Private Wealth Systems delivers one-touch access to analyze and oversee their investments and managers in an unbiased way so that every wealth owner gets the information they want, in the way they want across every asset class, bank, manager, strategy, theme, mandate, currency and ownership structure. This changes the dynamic of the relationship to something that is relevant, personal, and powerful for every wealth owner.  

Supporting individual perspectives
Let’s say that each family member has a partial interest in a trust and that trust invests in ExxonMobil. The first family member may not question the investment while another family member may want to minimize exposure to fracking. Another family member may feel that ExxonMobil is socially responsible while another family member may feel that it is not socially responsible. The advisor must be able to support each of those individual perspectives and reflect those views in the analysis, reporting, and management of each individual’s wealth.  

For example, classifying ExxonMobil as fracking for one family member but not others would allow that individual to see an increased allocation and exposure to fracking because of her personal views of the investment. A family member could include ExxonMobil in their allocation for socially responsible investing while another family member could exclude it. In working with a large well-known family office, one family member asked if she could call a specific investment “the devil” because of a poor track record on human rights. Although several family members laughed, the answer was yes, you absolutely can use free text to create a title called the devil and associate any investment, manager, theme, account or portfolio as such and analyze your exposure to the devil, as well as track how the devil is performing against peers and custom benchmarks. Supporting individual needs at any level, across any financial instrument and ownership structure allows for a new definition and a new purpose for personalization in private wealth. 
Illusory claims  
When it comes to personalization, I see a lot of illusory claims being made in the technology sector which make me worried for the institutions in terms of regulatory and reputational risk, as well as wealth owners who rely on information they believe to be personalized. More alarming, is how tech companies themselves often seem to have completely misunderstood the personalization challenge they are trying to solve. 

Most financial technology companies define personalization in terms of visualization, allowing users to drag and drop charts and graphs. This is because most people buy with their eyes and a visually pleasing user experience goes a long way toward driving market adoption. Visual configurability is important and that is why Private Wealth Systems has introduced its new mobile enhancement allowing users to create their own drag-and-drop digital dashboard across every permutation of allocation, performance, gain/loss, liquidity, drift, fees and expenses and other critical components. Modern, engaging and perhaps even fun though that may be, all this is just window dressing to us. 

The other, very much neglected but truly most important, aspect of personalization is the data itself. Namely, being able to have complete and effortless control over the grouping, the modeling, and the classification at the individual level. 

Many providers often forget that “family office” and “family wealth” are misleadingly homogenous terms for very heterogeneous groups of people. A family office is likely to have multiple advisors, structures, strategies, asset classes, mandates and more - multiple everything. The family itself will certainly represent people spanning different generations, objectives, and world views. Where other software systems fail is not supporting that multiplicity from the perspective of each individual wealth owner. What we should be asking is, what is important to each wealth owner? What legacy does he or she want to have? How is the analysis, reporting, advice and management aligned with that individual legacy?  

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