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Harnessing Technology to Strengthen the Human Element of Wealth Management

Wealth Management

By Greg King, CFA  |  January 24, 2018

Wealth managers are critical in translating their clients’ aspirations into investment strategies and personalizing the service they receive. However, advisors have an Achilles’ heel. Like all people, the amount of information they can store and process is finite, and the preferences exhibited by their clients are subject to misinterpretation. Investors are vulnerable when responsibility for recording and handling client data lies only with the human advisor.

To address this risk, the relationship between advisor and technology is becoming increasingly relevant. On one hand, wealth managers need to deploy digital tools to lighten their administrative workloads so they can prioritize client relationship management. On the other, they must leverage big data and web analytics to enhance their understanding of clients.

According to a survey of over 1,100 HNWIs recently conducted by FactSet and Scorpio, HNWIs handle 44% of interactions with their wealth managers online, suggesting a growing appetite for digital tools as part of the relationship. Furthermore, rather than shying away from technologies, the wealthiest investors are also the most digitally active. The proportion of interactions conducted online rises to 48% among those whose wealth exceeds $20 million. This is only 7% higher than in the $500,000-$1 million wealth bracket, showing that this trend is consistent across wealth brackets.

HNWIs Increasingly want their interactions conducted online

As far as the human factor is concerned, HNWIs most commonly cite inaccuracy and misunderstanding as the greatest drawbacks of working with an advisor. Approximately a third of investors worry their preferences may be subject to interpretation by the advisor, the information they receive may not be fully accurate, and the relationship manager may be too busy to respond to their requests. These perceived flaws are an inescapable part of human nature, meaning wealth managers must harness technology to counter risks in the human relationship and optimize advisors’ strengths.

For example, technology can create a more thorough record of client conversations, hold large quantities of evidentiary data to inform investors, and synthesize performance so firm CIOs or research teams can offer their insights. Technology can also assist in the creation of personalized wealth plans based on investing preferences and risk profiles, allowing clients to experiment with investments in ESG, emerging markets, or Bitcoin, for instance. Ultimately these benefits do not detract from an advisor's skill, but rather help improve their efficiency.

Bringing Artificial and Organic Intelligence Together

These findings rebuff the belief that HNWIs place little or no value on digital tools. However, while technology is an opportunity to streamline interactions and ensure client needs are met, the hallmark of a premium service is still human touch. Empathy, listening, and understanding of subtle emotional cues are all areas where technology is currently unable to compete with humans, so it is understandable that investors remain discerning.

Another potential criticism of digital integration is that technologies carry risks. With such a large proportion of the advisory relationship conducted online, wealth managers must ensure systems are equipped to meet the advanced needs of HNWIs. For instance, among investors’ top concerns with digital solutions is vulnerability to cyberattacks and errors. Wealth managers must therefore prove their technologies are robust and secure to alleviate these worries. Through active listening and empathy, human advisors are able to develop a holistic picture of their clients’ situations, and alleviate their concerns in short order. These skills are valuable, hard to teach, and essential to delivering the optimal client experience. However, the margin of error and limited processing power that come with being human present risks for investors.

Learn more about how advances in technology are rapidly changing the nature of client/advisor interactions in our eBook: The Resilience Agenda: The Wealth Manager’s Guide to the New Era of Volatility. 

resilience agenda ebook

Greg King, CFA

Senior VP, Senior Director, Wealth Management and Digital Solutions Strategy and Product Development

Mr. Greg King is Senior Director, Wealth Management and Digital Solutions Strategy and Product Development at FactSet. In this role, he focuses on the allocation of resources for all areas of the Wealth Management business; from market research and product development to implementation of a parallel sales and marketing plan. Mr. King moved to London from the U.S. in 1999. Prior to leading FactSet’s Wealth Management Strategy, he spent eight years as Director of Workstation Solutions for the EMEA and APAC regions, and before that, was Vice President, Institutional Sales in FactSet's UK Investment Management region. Mr. King earned a degree in Economics from Boston College and is a CFA charterholder.


The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.