How Morningstar’s Data Supports Wealth Managers with Digital Transformation and Regulatory Requirements

The financial services landscape is constantly transforming. From changing financial regulations and shifts in client demands to ever-expanding datasets, firms are under increasing pressure to maintain their competitive advantage.

That’s where Daniel Brown comes in. As Sales Director at Morningstar for more than 12 years, Brown is an expert when it comes to enabling firms to stay one step ahead of the crowd by leveraging the power of Morningstar’s extensive independent data and investment research along with best-in-class software.

“As Sales Director, I collaborate with a broad range of different clients. From asset managers and insurers to private banks and investment platforms. A key client segment I’ve had the pleasure of working with for many years now are wealth managers.

I’ve seen first-hand over the last few years how their objectives have evolved, and how Morningstar have developed solutions to help them meet these ambitious goals. The first objective focuses on creating and managing their investment portfolios and investment line-up through data-driven decision-making. Whether wealth managers want to compare funds or conduct portfolio analytics, we ensure they have the data they need.

The second objective for wealth managers is embedding Morningstar's transparent data and research into their client communications, whether that’s through digital experiences or reporting solutions. End investors need to be informed about investment decisions in a way that’s understandable and accessible.

The third objective, which is particularly important, relates to compliance. As financial regulations come into force, wealth managers need deep pools of data to comply with regulatory requirements, mitigate risks, avoid reputational damage, and ultimately, protect their clients.

The fourth objective is about looking to the future by leveraging Morningstar's powerful data and research insights to identify investment opportunities, emerging trends, or consumer demand for new products.”

Non-negotiable objectives, lofty ambitions, and new market opportunities means it’s an exciting time for wealth managers. But these factors also put them under a tremendous amount of pressure, and with big goals come big challenges.

Brown is acutely aware of these complex challenges. “I’m in constant contact with wealth managers from across the industry. While some of the challenges may be more nuanced, either firm-specific or product-specific, time and time again I’m hearing directly from wealth managers about two key challenges they’re struggling to address.

The first is digital transformation. Technological advances paired with shifting client preferences means a digital-first experience has become the expectation. Clients are looking for hybrid engagement models to talk to wealth managers about investment objectives, portfolio performance and investment opportunities. Wealth managers need to have the technology and capabilities to surface new data and insights to their advisers to empower them in client conversions. At the same time, wealth managers are using technology to re-formulate and refine their advisory services so they can serve new clients at scale in a more cost-effective manner. To do all of this effectively, wealth managers need a consistent source of investment data to form the foundation of readily accessible technology.

The second challenge relates to new regulations in the UK, Europe, and further afield. Wealth managers have been impacted by regulations focused on good customer outcomes, including fair and transparent pricing. There has also been a raft of sustainability-focused regulations, from the Sustainable Finance Disclosure Regulation (SFDR) to the UK Sustainability Disclosure Requirements (UK SDR). These financial regulations will have a significant impact on how end investors think about their financial goals, so wealth managers need new datasets enhanced by expert insights to support their client’s journey.”

As the challenges faced by wealth managers evolve, so too do the suite of Morningstar solutions. It’s something that Brown has had a front row seat to witness these past 12 years.

"I’ve seen our data coverage and offerings in the space skyrocket. At Morningstar, we collect data on over 620,000 investment offerings, including funds (open-end, closed-end, ETFs, and life and pension funds) to stocks, bonds, and our proprietary Morningstar Indexes.

When it comes to supporting digital transformation, Morningstar helps wealth managers by integrating our extensive high-quality data through our Direct Web Services APIs. Wealth managers can then take this curated and customised dataset and develop their own front-end experiences. This enables the end investor to go in and independently assess the status of their portfolio, whether they want to review potential exposures and risks, or see where new investment opportunities might lie.

They can then go a step further and ask for a wealth manager to reach out to them and have a conversation about their goals and objectives. It’s here where efficiency and effectiveness meet – clients can benefit from a self-serve element while still receiving a personalised experienced.”

While technology has certainly evolved at a rapid pace, wealth managers also need to respond to another fast-moving component – regulation. “From Consumer Duty in the United Kingdom to the Task Force on Climate-related Financial Disclosures (TCFD), it’s essential that wealth managers integrate new data into their investment governance process and client communications.

Financial regulations can be very complex, especially at the early stages, and I've seen numerous wealth managers struggle to get to grips with this. They’re trying to make sense of what these rules mean, and the data or reporting needed to comply.

Regulations may be complex, but our response is simple. We’ve expanded our datasets to support wealth managers across different regulations and regions. More data means more transparency, which is something our wealth managers and end investors are increasingly asking for. When combined with sophisticated analytics and our intellectual property, wealth managers have the resources to not just meet their regulatory requirements, but to go beyond and deliver a truly exceptional client experience.”

“At Morningstar, our data is impactful because our coverage is enriched by context. It cuts through the noise to surface easy-to-understand insights elevated further by proprietary metrics, world-class research, and instantly understandable visuals. For wealth managers and their clients, the data we provide – enhanced by a cohesive narrative – is essential to constructing a portfolio that is clearly aligned with their end goals.”

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Daniel Brown has not received any cash or non-cash compensation from Morningstar, directly or indirectly, in exchange for this client success story.