Caixabank: Capitalizing on digital tools for more efficient and high-quality advice

Some studies suggest heirs look for a new financial advisor after inheriting their parents’ wealth. What are you doing to cultivate family loyalty and prevent heirs moving their money to other institutions?

We want to get to know the successors to our clients so they feel they have a relationship with private banking now and become our clients in the future, refreshing our client database and avoiding the loss of assets.

Our objective is to convince the heirs that our private banking offers the best services and products in the market so they remain loyal clients in future. 

We try to manage family units, to get to know the heirs from the start of the relationship. We set up a private banking family unit model a couple of years ago to develop this. This algorithm is based on big data, enabling us to identify the family unit of our clients and help them in their succession planning. This model gives us greater knowledge of our client database and a method for managing it more efficiently, enabling us to identify new sales opportunities by detecting potential heirs of Private and Premier Banking clients, always complying with data protection standards. Getting to know our clients’ successors enables us to contact their heirs to cultivate a good relationship and ease the path of succession and inheritance.

How do you approach inheritance advice? How does it differ from normal financial advice?

Our financial advice covers all the stages our clients go through, from day-to-day management, medium-term peace of mind, managing the future and retirement through to well-being later in life and generational transfers. We try to undertake a 360-degree analysis to design the most appropriate portfolio structure. We also design specific products for efficiently managing the transferring of wealth to heirs.

How different are Millennials from their elders? How different are their expectations and behavior?Millennials demand greater digital capabilities and cost transparency, and are more aware of ESG criteria in decisions about their investments.

How have you transformed your wealth management services to satisfy the new generation? And how are you engaging potential new clients?

We provide solutions that focus on the demands of new generations: 

Explicit charging models

CaixaBank private banking is committed to a model that focuses on reducing conflicts of interest with our clients. The best practice is to move forward with an explicit-payment paradigm, instead of relying on operating fees. This is why we are developing independent advisory services, such as CaixaBank Wealth and CaixaBank Wealth Management Luxembourg. We are also enhancing our discretionary portfolio management strategy, ensuring it is smoothly integrated into our client-manager relationship. As leaders in discretionary management services in Spain by assets under management (AuM), we believe this is the best solution for both clients and managers.

Robo-advisor services and discretional portfolio management

CaixaBank is the leader in discretionary portfolio management in Spain, with assets of €32.2Bn (March 2021). The Smart Range recorded significant growth last year and has already achieved equity of €3.5Bn, driven by the launch of the new Smart Allocation Range. The equity under discretionary management at CaixaBank grew by more than 9% in 2020.

ESG

Younger generations are more conscious of environmental, social, and governance (ESG) criteria in their investment decisions. Last year, we recorded a 176% increase in the average balances of private banking clients in socially responsible investment (SRI) mutual funds. We expect this to continue.

This year we have launched a new range of investment funds and pension plans, the SI Impact Solutions Range, with the highest sustainability rating. This launch is driving CaixaBank’s impact investing and is fostering a culture of sustainable finance in society. With this goal in mind, CaixaBank Group has signed a strategic partnership with BlackRock. This firm is the world’s leading asset manager by asset volume and has been active in Spain since 1994. It has also been one of the most committed firms to investing based on sustainability criteria over recent years. This partnership applies to impact investment in the equity strategy, although the same philosophy will apply to all CaixaBank's impact investing. BlackRock’s Fundamental Equity Impact team will provide consultancy on impact investing in equity investment portfolios based on its unique methodology for selecting companies that have a real impact on society and the planet.

According to research by Accenture, the current wealth management advisory model is not working for women. Do you notice any differences in investment behavior among women compared to men? Do you have any examples? How have you tailored your offerings to serve female clients better?

We are convinced that the more you know about your clients, the better and more efficient service you can provide. This is why we have launched a pioneering advanced segmentation of our clients. We use advanced data, analytics, and machine learning to consider over 30 variables, including gender. This has enabled us to classify our clients into clusters based on characteristics they share or that differentiate them from others. We are launching new commercial strategies that consider these specific clusters. So, we are not only considering gender, but also many other variables that determine approaches to investing, to better adapt to our clients. These models allow us to offer a personalized value proposition to our clients based on their characteristics, enabling managers to manage their clients more efficiently, based on their personal situation and our client journey planning.

Technology is being implemented to digitize almost every area of banks and banking, but advisory remains difficult to automate. How is your bank approaching integrating AI into its advisory services? Will it be a mix? Will the human touch always be required in wealth management?

Digital transformation is a never-ending process in banking services. We have to understand that the new generations do not consider technology as a tool for performing their tasks better, but as an integrated part of all aspects of their lives, with multiple effects on the way they interact with people, companies, and institutions. And they won’t wait for banks to adapt to their new demands.

We believe that technology cannot replace the value added by the role of the advisor, but it can complement this role by giving tomorrow’s wealth managers new tools to support and inform their advisory function. It is also contributing to increased professionalization of the wealth management function, enabling the performance of wider tasks with the added benefit of providing a more bespoke feel.

The wealth management industry can capitalize on the rise of technology through faster client acquisition, onboarding, and servicing. This will free up more time and resources for bespoke and personalized client advisory services and discretionary wealth management, creating a virtuous cycle of client service efficiency and high-quality advice as the cornerstones of a successful wealth management business.

How do you see wealth management evolving over the next decade? (open banking, new players, new technologies…)

The next ten years are going to generate a profound change in wealth management. Technology and data will foster the entry of new players with more niche value propositions, while pushing traditional providers to offer more open and technological services, improving the service for clients. We will also see a change toward explicit payment models, focusing on independent advice that will require a new way of doing things from the institutions and a change in the relationship model for managers.