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Wealth Management: Harnessing the Transformative Potential of New Technology

Technology and Tips

By Philipp Zerhusen  |  July 31, 2019

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

We married this research with expert interviews from influential disruptors who leverage digital technology to win business in their respective fields, and hosted roundtables with high-profile wealth management professionals in three major markets to gauge their attitudes towards digitalization from the advisor perspective.

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 at the same time boosting firms’ competitiveness and advisor efficiency.

Making Digital Pay

Investors across the wealth scale—from those in the mass affluent category with $250,000 to invest to ultra-high-net-worth (UHNW) clients worth $10 million—are already enthusiastically embracing online platforms. Nearly nine out of 10 respondents said they used online platforms to complete some of their investment activities and around half said they used them to independently search for, or purchase, new investment products. Only one in 10 said they were unwilling to use online platforms.

Clients embrace the chance to invest online

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 get customers onboard at an early age, knowing the trusting relationships they build will pay dividends when these individuals require more sophisticated advice.

FinTech challengers are intensifying the competitive pressure and are well-positioned to address the needs of these segments through a relentless focus on the platform experience. These firms are challenging traditional thinking by reconsidering how performance data can be visualized. Advisors who invest in this area not only have an opportunity to deliver added value to clients but also to be standard-bearers for an emerging priority of the industry as a whole.

Harnessing digital opportunity requires a shift in mindset among traditional operators and involves drawing lessons from 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 platform features which would expand the volume of UHNW assets under management.

Disrupting the Advisory Approach Through Intelligent Design

For wealth managers, using design and visualization to add value and generate trust is vital in order to remain competitive. Challenger banks and robo-advisors have altered the relationship management model by offering online-only wealth management to scale. While these solutions will not be attractive to everyone, their very existence is changing client expectations about the digital experience.

A byproduct of today’s data-driven world is the growing importance of visualization to help both businesses and consumers draw more meaningful conclusions from the cascade of information confronting them. This is a clear priority for wealth firms, given that two-thirds of investors feel their wealth managers should be doing more to visualize the information they provide.

Specifically, 59% of clients say they find it difficult to discern the key points from graphs and charts, rising to 63% among advisory and self-directed investors. Clearly, wealth managers need to do more to distill complex information.

Rating wealth managers on the use of data visualization techniques

Data visualization can be a highly effective way for firms to improve their insight delivery and drive trust and engagement with customers. A key aspiration should be to ensure the digital touchpoint reflects the values of quality, knowledge, and trust that clients expect from advisors.

Improving Client Service with Personalization

Used appropriately, highly personalized content can empower firms to supply clients with the tools and insights for a better digital experience while simultaneously increasing the competitiveness of firms and advisor efficiency.

While data security remains important, the evolution in client behavior suggests investors are gearing up to expand their relationships digitally. In exchange for sharing sensitive information about their personal lives, our research shows investors anticipate enhancements to three specific areas: information delivery, the client experience, and the wealth management proposition. At the same time, accessing clients’ data more frequently and from more varied sources allows wealth managers to build a more holistic picture of their clients and better equip advisors to deliver their goals.

As advances in technology continue to permeate investors’ lives, wealth advisors need to become more comfortable with using digital tools and asking clients to engage with them through new channels. Through a combination of segmentation beyond the usual demographics and risk profiles, and the application of sophisticated data capture, advisors can increase their understanding of the client’s context and online behavior to deliver more targeted and suitable content.

Ultimately, access to additional information from broader sources allows wealth managers to develop holistic views of their clients, making the value proposition, online experience, and information delivery more relevant and valuable to each of them.

This article originally appeared in Asian Private Banker.

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Philipp Zerhusen

Director of Market Development

Based in Frankfurt, Philipp 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. Philipp earned an MBA from the University of Cologne, a professional banking diploma, and certifications in bond trading, project management and CRM.

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