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Wealth Management: Capitalizing on the Transformational Potential of New Technology

Wealth Management

By Philipp Zerhusen  |  December 5, 2018

In March 2018, FactSet, in association with Scorpio Partnership, conducted a global online poll of 877 investors with an average net worth of $4.88 million. Respondents hailed from the U.S., the UK, Singapore, and Switzerland, and answered questions concerning the digital transformation of the wealth management industry, with a focus on three key debates driving disruption: optimization, visualization, and personalization.

We coupled this research with a series of expert interviews with influential disrupters who have leveraged digital technology to win business in their respective areas. Additionally, we hosted think tank roundtables with high-profile wealth management professionals in three major markets to gauge attitudes toward digitalization from the advisor side of the relationship, and further illuminate the opportunities that exist today.

Our findings indicate that optimized technology, improved data visualization, and highly personalized content can empower firms to supply clients with the tools and insights needed for a better digital experience, while boosting both firm competitiveness and advisor efficiency. What’s more, our research shows that the common assumptions about hesitation on the investor side toward technology in the relationship do not hold true.

Evolve or Dissolve

Investors across the wealth scale—from the mass affluent customer with $250,000 to invest to the ultra-high net worth (UHNW) client worth $10 million—are already embracing online platforms. Nearly nine out of 10 respondents use them to complete some investment activities; about half independently search for or even purchase new investment products. Only a tenth of our sample is unwilling to try these services.

Clients embrace the chance to invest online B

We learned from our conversations with the industry disrupters that fintech firms are already taking advantage of this interest in new technology and are making a long-term play for young investors in particular. Their approach is to onboard customers at an earlier age than is typical in the industry, knowing that the trusting relationships forged will pay dividends once these individuals require investments that are more sophisticated.

Digital transformation is therefore an imperative for wealth advisors. If the firm does not innovate and provide the necessary digital tools, someone else will—and the client will ultimately switch to those offering the desired capabilities.

Feed the (Digital) Hunger

However, our research highlights a new set of profiles based on respondent readiness to adopt new technology in wealth. Rather than focusing exclusively on age, firms must prioritize the requirements of the so-called Early Adopters among their clients, who will be the first to trial and assess new functionality. These individuals self-categorize as “tech evangelists” and their patterns of usage will determine platform success or failure. Their views deserve precedence, given they have an average net worth of $5.82 million.

Early Adopters are willing to have more online interactions with their wealth managers, but they are unlikely to bother if their early experiences are subpar. For example, glitches and slow speed are problems for about a quarter of these individuals. Equally frustrating is that security concerns are running up against their expectation of quick and pain-free login procedures.

Appearances Really Do Matter

For investors as well as firms, the value-drivers of the online wealth proposition center on portfolio optimization. Clients believe an interactive and instant-access approach to investment insights would improve how their portfolios are managed. Forty-six percent say that real-time analysis of performance is an urgent priority; the same proportion believes that real-time reporting of their investment positions should be an area of focus.

Value means different things to investors B

There is other low-hanging fruit for wealth managers when it comes to optimization. For instance, 42% of investors believe that they should receive proactive suggestions for investment opportunities that are tailored to their interests. A sizeable minority (40%) would also value automatic rebalancing of their portfolios in response to events, such as spikes in volatility. Wealth managers are expected to bring together their understanding of client tastes and tolerance with new technology to improve the online proposition.

Fintech challengers intensify the competitive pressure and are well-positioned to address the needs of these segments through a relentless focus on platform experience. These firms are already starting to pull ahead by reconsidering how performance data could be visualized. Advisors that focus and invest in this area not only have an opportunity to deliver added value to clients; they also have a chance to be the standard-bearers on an emerging priority for the industry as a whole.

Unlock Profitability Through Hybrid Advice

With profitability at the top of the business agenda, financial advisors must carefully consider their delivery model. While the majority would like to focus intently on their UHNW clients, they must also seamlessly support customers further down the wealth scale, raising the risk that they will try (and fail) to service both segments efficiently.

Here, digital offers a viable path forward. The so-called “hybrid-advice model” can be used to transition costly-to-serve customers (usually mass affluent) online to complete most of their investment activities. Human advisors remain accessible for value-added interactions but are freed up to focus on wealthier investors. At the same time, firms do not lose out on the large proportion of the market that needs investment services but is difficult to support profitably.

For mass affluent investors, a critical advantage that could be offered by an online platform relative to an offline experience is access to interactive planning tools. They anticipate the positive impact that a more dynamic relationship with their wealth could have on their longer-term trajectory. These clients are willing to mostly self-serve online if they continue to receive tangible evidence of their wealth managers’ expertise. This was also prominent in our previous research where we found that more interactive investor education is necessary to improve resilience of client investment strategies and confidence in the advisory relationship.


Harnessing the digital opportunity requires a shift in mindset among traditional operators, and perhaps even taking a lesson or two out of the fintech playbook. Firms should address the pain points holding clients back from interacting with them online. They should assess which functionality will nudge costly-to-serve customers to do more wealth management themselves, as well as which platform features would grow the volume of UHNW assets under management.

Crucially, advisors should also go further and make full use of the transformational potential of new technology. The most successful firms will introduce tools on their platforms that enable more effective portfolio management through real-time analysis and reporting. These digital investments are intuitively prioritized by investors because they are tangible and deliver financial value.

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Philipp Zerhusen

Vice President, Director, Digital Wealth Solutions

Mr. Philipp Zerhusen is Vice President, Director Digital Wealth Solutions and Market Development at FactSet. In this role, he is in charge of Market Development as a Director for FactSet Digital Solutions GmbH and is responsible for various market segmentation, strategy, and prizing projects. Based in Frankfurt, Mr. Zerhusen has worked in the financial industry for 25 years. Before his current role, he held various international management and senior enterprise solutions roles across EMEA at Thomson Reuters, founded a number of start-ups, and worked for several years in Asset and Wealth Management at Sal. Oppenheim. Mr. Zerhusen earned an MBA from the University of Cologne and a professional banking diploma.


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.