Wealth managers play a critical role in translating client aspirations into actionable investment plans and strategies. However, in recent years, the volume and diversity of information available to those in wealth management has increased exponentially. As a result, it has become incumbent upon wealth managers to incorporate technology to enhance their strategies so they can more successfully manage the goals and requirements of their clients.
To a large degree, this has already started to happen. According to a survey of over 1,100 high net worth individuals (HNWIs) recently conducted by FactSet and Scorpio Partnership, 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 bracket, showing that the trend is consistent across wealth segments.
That being said, there are regional differences in investors’ comfort with technology in wealth management.
East vs West
According to our research, confidence with digital offerings is highest in the Eastern markets, such as Singapore and Hong Kong. In this region, investors are arguably more aware of human-related challenges and therefore may need less convincing of the benefits of digital integration in supporting the wealth manager. Only 5% of investors in Hong Kong and 7% in Singapore believe that working with a human advisor is completely risk free. These clients will therefore require greater visibility of the systems used to support their relationships.
By contrast, in the U.S. and Canada—where the relationship model is most established—investors place greater trust in their human advisors. In this region, as many as two in five (approximately eight times as many as in the East) feel that working with a human advisor is completely risk free, suggesting that HNWIs are less aware of how technology can help standardize and improve processes. Among investors’ top concerns about digital solutions is vulnerability to cyberattacks and errors. Wealth managers must therefore prove their technologies are robust and secure to alleviate these worries.
For clients that mirror these concerns, explaining that technology is not intended to replace or subvert the advisor will be important. Technology should be positioned as strengthening execution, and reducing advisors’ administrative workloads to prioritize client service. Clients should be reminded that in many cases, technology can increase client-wealth manager contact. One major study found that the introduction of online wealth management channels drastically raises the level of interaction between banker and client, from 5-10 times per year to 150-250 times.
While clients may have apprehensions, firms need to encourage seamless integration of digital and human capabilities in order to reduce potential risks brought about by human error. This will sharpen competitive advantages and allow them to deliver the best of both worlds to clients, enabling their digitally enhanced advisors to boost productivity and facilitate execution. Ultimately, this shift in approach may lead those in Western markets to embrace technology in the same way their counterparts in the East have.
In his role, Greg focuses on the allocation of resources for all areas of the Wealth Management business; from market research & product development to implementation of a parallel sales & marketing plan. Greg moved to London from the U.S. in 1999. Prior to leading FactSet’s Wealth Management Strategy, Greg spent eight years as Director of Workstation Solutions for EMEA & APAC, and before that, was Vice President, Institutional Sales in FactSet's UK Investment Management region. Greg graduated from Boston College in 1996 and is a CFA charterholder.