client onboarding technology / Mikhail Seleznev

This article appears in the February 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

Four years ago, onboarding new clients was a “complete nightmare” for the team at Harbourfront Wealth Management Inc. “It was a manual process,” said Mark Pinto, president of the Vancouver-based firm.

In instances in which Harbourfront advisors had permission to access client data, they would receive a spreadsheet containing the clients’ information, Pinto said.

“We would have a team of people who would manually populate all the documents,” Pinto said. The team would then send the documents to the advisors, who’d review them for accuracy. The whole process was paper-based, Pinto added, so advisors would print the forms and clients would have to sign the papers in ink. Clients would then have to return the signed forms to Harbourfront by courier.

Handwriting was often illegible, and sometimes information was missing. Data would then have to be input manually.

Then, in the first quarter of 2019, Harbourfront brought in a proprietary client-onboarding platform. (Harbourfront did not identify the platform by name.)

The new digital client onboarding system uses the DocuSign electronic signature product, Pinto said.

“It’s a proprietary platform that contains artificial intelligence AI. And the factors that we used [to select it] were ease of use and making sure there’s straight-through processing, from the time the client signs, to compliance, to operations and account opening.”

Straight-through processing means the wealth-management firm’s team members do not have to re-enter data from the forms the clients have filled out, Pinto said.

“The client is giving [the advisor] the information,” Pinto said. “The [AI] always checks to make sure that the information is basically valid — [for example,] a postal code with an address, a social insurance number that is valid. So, it is impossible to submit that document if it’s not in good order.”

With handwritten forms that sometimes included inaccurate information, the advisors and the clients were “playing ping-pong with the back office,” Pinto said of the manual system.

The administrative burden of collecting “wet” signatures on paper is one problem the industry is trying to solve through new onboarding technology.

The pandemic has presented problems for advisors in getting client signatures, said Maria Jose Flores, chief compliance officer with Carte Wealth Management Inc., which has been using a digital onboarding platform for about 10 years. (Carte also chose not to identify the platform.)

“We have to slowly remove ourselves from this manual way of doing things and leverage the technology now,” Flores said. “Before five years ago, nobody was thinking about electronic signatures. Now, everyone is using [them].”

The team at Carte had to learn the regulatory issues surrounding electronic signatures, such as which provinces permitted the technology and which still required ink on paper.

“It took quite a bit of time to nail down the process,” Flores said. For example, she said, some provinces will not allow a client to appoint a beneficiary through electronic signature.

Carte is working on several new features, including digital onboarding through mobile apps. The firm’s onboarding platform is web-based and works on computers and mobile devices through a browser. A mobile app would make the platform easier to use on mobile devices.

Flores anticipates the mobile version of Carte’s digital onboarding platform will be released this fall.

Carte also is working on integrating its digital onboarding platform with its Salesforce customer relationship management (CRM) software. Carte Wealth, a mutual fund dealer firm, operates alongside Carte Risk Management Inc., a managing general agency that provides life and health insurance.

Carte aims to have its digital onboarding platform “talk” to both the wealth management and the insurance CRM systems. At the time of writing, Carte’s digital onboarding platform was separate from its two CRM systems.

“We’re planning to bring [the digital onboarding platform] within Salesforce because our vision is to do more things through Salesforce,” Flores said. “There are a lot of CRM [products], but they don’t connect with back-office systems.”

Integration with other systems was an important factor for Toronto-based Designed Securities Ltd. when it selected its client onboarding platform. Another factor was the “flexibility” to make changes to the onboarding system, said Gillian Kunza, CEO of Designed Securities. Kunza’s firm chose Mako Fintech.

Kunza pointed out that developments such as the client-focused reforms and other regulatory changes, as well as modifications to Canada Revenue Agency forms, may necessitate occasional adjustments to an onboarding system.

“You can’t take four months to update a workflow or to get paperwork updated,” she said. “The system has to be agile enough so that the developers can get in there and make changes on the fly. So, it’s good for dealers or people making the decision to investigate how flexible [a prospective client onboarding system is].”

Among the questions Designed Securities considered before selecting its platform was whether a client would be using the same system as the advisors and staff in the head office. “Or does the system require that one component of the workflow use something else?” Kunza said.

She emphasized the importance of choosing a digital onboarding platform from a technological as well as a wealth management standpoint. The decision should include the input of technology experts as well as wealth management professionals, she added.

“If you’re making the decisions from a purely a wealth management [perspective],” Kunza said, “you’re either missing out on some important questions or you’re maybe not doing quite as thorough due diligence.”