The Secret Sauce in the Top 6 Client Onboarding Vendors

There is a huge difference in scale between JP Morgan, the largest US retail bank with over $2 trillion in assets, and a small community bank like the Bank of Ontario, which is just shy of $50 million in assets.  They differ in almost every aspect including number of customers, branches, lines of business and global presence. But one thing that every financial services firm absolutely has to do is onboard new clients onto their technology platforms.  If this process is flawed, it could kill customer satisfaction and severely limit their ability to maintain growth. Selecting the right software to manage the onboarding process is crucial to starting every new client relationship off on the right foot. One of the ways you could have increased your knowledge of the leading vendors in the client onboarding space was to have attended a discussion I moderated at the recent In|Vest NYC 2018 conference.  An all-star panel provided a vendor-agnostic point of view that was as refreshing as it was informative. (See Digital Digest from the InVest 2018 Conference) Will Trout, Head of Wealth and Asset Management at Celent, gave an overview of some of the leading onboarding products.  He believes that one of the biggest challenges for wealth management providers is converting their people, process, and pricing from the old way of doing business into the digital sphere.

Onboarding vs BPM

The old way of doing business involved cobbling together a lot of different point solutions that rarely worked together seamlessly, Trout explained.  This included critical regulatory functions such as KYC and AML as well as standard business functions of portfolio management and document processing.  But the industry has moved beyond this fragmented environment to a more tightly integrated approach. And the change has been dramatic in terms of useability and client experience.client onboarding Somewhat like moving from a word processor to Google Docs or upgrading your flip phone to an Android device. The industry has moved forward over the past couple years, Trout continued, migrated beyond just onboarding to encompass business processes management (BPM) and bringing many processes together in a consistent fashion. Trout described the fundamental divide in the marketplace between solutions designed specifically for onboarding versus those that provide BPM.  While onboarding tools have become more comprehensive and now cover much of the client lifecycle from account opening to account termination, BPM covers a much broader area. BPM vendors such as Pega and Appian are the glue that pulls together the whole process. Comparing a point solution like DocuSign to Pega would be an apples and oranges comparison, Trout declared.  His product categorization distinguishes between large BPM-type platform middleware (Pega and Appian) versus specifically designed workflow products like Doxim and Agreement Express. Another difference between these vendors is that some are solely focused on serving the financial services industry while others work across many client segments.  This seems to be bifurcated based on company size with the smaller firms (Doxim & Agreement Express) focused on financial services while the larger firms (Pega & Appian) offer generic solutions across multiple industries. For any financial institution, a big part of the choice of vendor will depend on their specific needs, Trout pointed out. Do they need the glue, the Pega that’s going to pull all the process together? Or are they really trying to just solve a specific workflow problem, the onboarding? (See 10 Disruptive Demos from InVest 2018) client onboarding

What is Lifecycle Management? 

According to Trout, Lifecycle Management covers the client journey from the first experience to the last. In fact, more than just onboarding or client enrollment, but actually the first touch point. The prospecting of the client to enrollment, account opening, the funding. He included custodian Apex Clearing in his vendor landscape, even though most people wouldn’t call them a traditional onboarding provider. But they have dramatically streamlined the onboarding process for firms that custody with them. From making sure account paperwork is in order, to covering all bases from a compliance perspective and continuing forward to the maintenance and the ultimate conclusion of the client relationship. (See Winners of Wealthtech: Bill Capuzzi) client onboarding Each specific vendor takes a different approach to the onboarding market, Trout observed. Pega has been around for a long time, and most people are familiar with them.  They also support six other industry verticals outside of financial services including healthcare, manufacturing and energy. Appway could also be called a leader, Trout proposed, even though they have only been around for a decade. He’s had some experience with them, particularly in the high net worth space. According to a report by CEB, 32% of wealth management executives believe that improving client onboarding from the front to the back office is a critical area of focus.  Customers are also frustrated by account onboarding problems with 70% complaining that their wealth management provider had to send them paperwork to physically sign before the account was opened. One example, that Trout related, of a successful implementation of client onboarding technology is Bessemer Trust. They were able to consolidate 12 discrete processes that made up their client lifecycle, from enrollment paperwork, to compliance and KYC, all into one single process. They also enabled the management of special assets and multi-custodial trusts, which is a much harder transformation than straightforward brokerage accounts, he noted.

Fenergo is an emerging vendor, based in Dublin, Ireland and is making a big push into the U.S., Trout added. They are not only trying to consolidate discrete processes, like KYC/AML, but also want to eliminate the need to repeatedly validate the client identities across multiple banks. They do that by pooling sanitized information from all their clients. If there were 50 banks working together, they would be able to validate information against each other, without necessarily tying it to an individual. But it’s there, it’s anonymized, and they can document that this client, in fact, does have a relationship with bank “X”, and she’s already been approved from an AML perspective. So that’s quite an innovative approach, Trout described.

The First 90 Days

The initial onboarding experience can have a profound effect on client referrals, as CEB research shows. Firms can potentially double their number of client referrals when they provide a low-effort onboarding experience, they report.client onboarding Not having access to the right data is a fundamental problem facing many wealth management onboarding processes, Trout expressed.  Their information ends up in a data lake, or as Trout called it, a data dump. Immediately, things start to fall apart with and the client not being segmented properly across the organization, which doesn’t leads to a satisfying client experience.” In fact, the opposite usually happens when a client is dropped into the system without any kind of process to track them or properly understand their specific needs. Their level of interest in this type of service is not shared across the organization. Then the client is assaulted by different marketing groups within the firm who want to cross-sell them, Trout observed. And as a result, a huge opportunity is lost for cross-selling, building relationship satisfaction or relationship expansion within the first 90 days.

“The account opening process is a golden moment in a new client relationship that almost every firm totally blows up”, according to Doug Fritz, CEO of consultancy F2 Strategy.  Wealth advisors put in tremendous time and effort to sign new clients who are then thrown headlong into a series of clunky, paper-based processes that are the opposite of the initially smooth prospecting experience. The first 90 days is a critical period, psychologically, in people’s minds to formulate an opinion about your firm, Fritz emphasized.  Failure to make onboarding into a great client experience puts your client relationships into a hole that could requires years to dig out. Even if the firm delivers superior investment performance and the financial planning is amazing, two years down the road, that client might still anchor their opinion on that crappy, first 90 days, Fritz warned.

There are some firms that are starting projects to improve their account onboarding processes, but Fritz believes that there isn’t enough of a focus in the industry.  Firms that can turn onboarding into a great client experience will pay huge dividends down the road, he stressed. Completely automated, electronic client onboarding provides a number of useful advantages, Fritz explained. Accounts are opened faster, which makes them available to receive funds, so billing can start earlier. It also gives advisors and their assistants a lot more of the time back that were spending on paperwork and client satisfaction will be awesome, he added. Additional CEB analysis agrees with Fritz that firms should focus process and technology improvements on the activities that have the most impact: speed of account opening and accurate and fast data collection. Digital experiences both within financial services in in other areas of consumers’ lives have dramatically raised the bar in terms of account opening expectations, notes Gavin Spitzner, President of consultancy Wealth Consulting Partners. Not only does a prolonged, paper-based account opening experience negatively impact client satisfaction and hurt front- and middle-office productivity, it is detrimental to topline growth in other ways as well according to Spitzner.  “Given the typical high net worth investor maintains relationships with three or four other wealth managers, a bad initial experience means your new client is much less likely to consolidate assets with you. The first 60 to 90 days is also the ideal time to ask for referrals and if it has taken 30 days to finalize paperwork, account transfers, new account setup, etc. you’re playing defense instead of leveraging a delightful new client experience into additional new business.” Spitzner adds that he is seeing a significant uptick in demand from banks in particular in the area of digital onboarding: “a number of banks who started down the path of a robo advice solution realized that the solutions they were considering could actually be leveraged in an even more meaningful way by automating overall account opening rather than just serving investors who wanted an algorithmic investment solution.  They recognized that their smallest clients would, in fact, have a better onboarding experience than their largest ones.” Spitzner also notes that firms that haven’t gone digital yet are recognizing that they can leapfrog e-signature oriented solutions and go straight to even more streamlined e-consent (click to agree) solutions some custodians are now offering.

3 Responses

  1. Hi,
    l love your material. Thank you for all your hard work. Do you know what Onboarding Vendor that Trout was talking about in relation to Bessemer?

    1. Samuel,
      Sorry, but I don’t know. I’ll ask him and see if he is allowed to share the name.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at