The Onboarding Process at Econopolis

The Handshake of Trust: Streamlining Client Onboarding in a Regulatory Landscape

Client onboarding is one of the most important stages in the client lifecycle for Econopolis. It represents the initial point of contact between our wealth management service providers and prospective clients. First impressions can significantly influence the rest of the client relationship, making them hugely important for both individual and institutional clients. A straightforward and user-friendly onboarding process can forge a bond of trust, serving as a crucial differentiator among peer financial institutions.

However, private banks, as well as wealth- and asset managers, must adhere to regulatory requirements when onboarding new clients. Maintaining sound compliance practices with consistently implemented standards is essential throughout the entire onboarding process, although it can sometimes be overwhelming for clients. Below, we guide you through the various stages of the onboarding process, highlighting the current trends and challenges that come along with the process.

Different Stages of Our Client Onboarding

The first stage of client onboarding commences with the very first interaction with our company. This can take various forms, including a simple phone call to our office, an email to the information mailbox that can be found on the Econopolis-website, or a potential client navigating to our Twain-website and completing the questionnaire. We promptly respond to the client via phone or email to discuss the needs of the potential client, usually followed by scheduling an appointment for a digital or physical meeting, either at our office in Wilrijk or at the client’s residence.

The second stage of the client onboarding encompasses the digital or physical meeting, where one of our wealth managers engages in a conversation with the prospective client. This dialogue is instrumental in uncovering the individual’s needs and personal values. Furthermore, it serves as an opportunity to articulate the ethos and convictions of Econopolis. Ensuring a harmonious alignment between the prospective client’s needs and values and Econopolis’ philosophy is paramount in fostering a bond of trust.

Before progressing to the creation of an actual portfolio proposition by the Econopolis wealth management, certain regulatory requirements must be fulfilled. These are encapsulated in the establishment of a theoretical MiFID-profile. The “Markets in Financial Instruments Directive” (MiFID) is a European directive governing the regulation of investment services and regulated markets. The following steps are undertaken to determine the MiFID-profile:

• Know Your Customer (KYC): This initial step involves collecting detailed information about the client to ensure a personalized and compliant service.
• Investment Goals: In this stage, the client's short-term and long-term investment objectives are defined, helping to shape the future investment strategy.
• Financial Situation: A comprehensive analysis of the client's financial standing, including assets, liabilities, and income, is undertaken to tailor investment solutions that match their financial capabilities.
• Knowledge & Experience Test: This involves evaluating the client's familiarity with investment products and their experience in the financial markets, ensuring that proposed investment strategies align with their level of understanding.
• Sustainability Preferences: Here, the client's preferences regarding sustainable and responsible investments are identified, allowing for the creation of an investment portfolio that aligns with their values and ethical considerations.

The first step in crafting the MiFID-profile is Know Your Customer (KYC), which is a summary of the potential client’s basic information such as birth date, marriage contract, political exposure (a politically exposed person (PEP) is a person who currently occupies or previously held a significant public position. Due to the nature of their position and power, PEPs are seen to be at a higher risk of engaging in corruption, bribery, and money laundering), etc. This first step is part of the Anti-Money Laundering assessment, aimed at verifying the identity of the prospective client and scrutinizing the origins of their funds. Subsequently, the second step involves delineating the prospective client’s investment goals and horizons, facilitating the assessment of their risk appetite and the formulation of a theoretical risk profile.

Afterwards, it becomes imperative to comprehensively assess the financial situation of the client, encompassing a detailed declaration of their assets. This stage is pivotal in evaluating whether the proposed portfolio fits seamlessly with the prospective client’s financial circumstances and in tracing the origins of their funds. Following this, the fourth step in the MiFID-profile development consists of a test to gauge the prospective client’s understanding and knowledge of the various assets they are considering for investment. Additionally, it aims to ascertain if the prospective client possesses any prior experience with these types of investments.

As a last step, the prospective client is asked to specify any sustainability preferences to be considered in the portfolio proposition. This addition, which came into effect in August 2022 following amendments to the MiFID II Directive, facilitates the integration of sustainability factors into the investment process. To comply with the stringent requirements set by this directive, the sustainability preference will be assessed, forming the basis for crafting a tailored sustainability profile. This ensures that the client’s desires and expectations regarding sustainability are accurately mirrored in their portfolio.

While this is a compulsory step, who do not have specific preferences are not required to complete the questionnaire in its entirety. In such cases, the wealth manager will steer the portfolio in alignment with Econopolis’ established values and standards. However, if any preferences are indicated, the wealth manager will incorporate them to the fullest extent possible within the defined risk profile.

Finally, upon completion of the MiFID-profile, the wealth management at Econopolis can formulate a customized portfolio proposition, which will be discussed with the prospective client during a conclusive follow-up meeting. In this meeting, the discretionary contract with Econopolis is formalized and the requisite documents for opening an account with the custodian bank are signed.

Current Trends and Challenges in Client Onboarding Processes

Traditionally, client onboarding has been associated with time-consuming manual paperwork. However, Econopolis also offers a more revolutionized digital and automated process, aimed to enhance the client experience through the Twain-platform. Research conducted by Deloitte reveals that many wealth managers, asset managers and banks find their onboarding process to be somewhat inconvenient for clients. Some respondents even indicated that they operate with a fully paper-based onboarding process, all the respondents indicated the need for a higher level of automation.

Using the Twain-platform, a significant portion of the manual paperwork is replaced by an online simulation, which culminates in a digital signature at the end of the onboarding. At Econopolis, we firmly believe that the digital onboarding process should retain the personal touch that is synonymous with Econopolis. As such, personal preferences and values are seamlessly integrated into a personalized portfolio suggestion during the digital simulation. This approach allows for a more detailed discussion with one of our wealth managers at a later stage.

Currently, the following steps are included in the digital onboarding process via the Twain-platform:

• Personal preferences and values
• MiFID Know Your Customer
• MiFID Investment Goals
• MiFID Financial Situation
• MiFID Knowledge & Experience test
• MiFID Sustainability Preferences
• Portfolio & Wealth Simulation

All the gathered information culminates in a portfolio proposition generated by the Twain-platform. However, to preserve the distinctive personal touch of Econopolis, this portfolio proposition is not binding. It can be further customized during a subsequent meeting with one of our wealth managers, always within the guidelines established by the MiFID-profile.

As we continue to improve in a more digital world, we remain committed to expanding and refining our digital onboarding process. This involves continually enhancing the Twain-platform, striking a harmonious balance between digitalization and personalization. Future initiatives may include incorporating artificial intelligence into the simulation workflow or launching a standalone mobile application to further optimize the Twain-process.