Wealth management needs to become tech

Digital technology continues to make an imposing difference to many industries, including wealth management. Having had such an impact on the culture of the sector, the changes made by digital technology are referred to as ‘disruptions’.

‘Disruption’, however, has negative connotations; we prefer to think of digital as an opportunity. Wealth management – an industry notoriously reluctant to adopt digital solutions – could greatly benefit from harnessing the potential of digital.

There are several facets to digital technology, including web, mobile, social, and analytics. While incorporating these individually into a strategy can be rewarding for a business, it’s when a firm utilises these facets in collaboration that they can truly benefit. This is what we refer to as a digital transformation – when digital technology becomes the backbone of corporate strategy. It’s one thing to offer a fintech solution for clients that lets them monitor their investments, but a transformation means redefining operating models to increase efficiency throughout.

Sadly, the finance industry has been slow to adopt any of these. According to the latest thinking by PWC, wealth management is one of the least tech-literate sectors of financial services, with only a quarter offering digital channels beyond email. That means 75% of the industry hasn’t moved towards developing mobile wealth management software, attempted to grow relationships through social media, or given any proper thought to streamlining and automating their processes using digital technology.

Currently, wealth management businesses are mostly interested in High Net Worth Individuals (HNWIs) from the baby boomer generation. However, like it or not, the Millennials are taking over and will soon form the majority of every market, including wealth management. Millennials are far more interested in using technology for their finances and are less dependent on financial advisors. To prepare for this inevitability, it’s time the wealth management sector considered a strategic transformation. Below are our top tips for wealth management firms considering going digital:

  1. Transparency is essential

    Digital transformation will change the way in which a businesses’ clients interact with their finances and how they engage with financial advisors (FAs). A layer of anonymity between clients and their investments can be removed by offering them access to all relevant information such as portfolio data and performance reporting. This will replace the anonymity with trust and empowerment, and trusting clients are more likely to continue to seek advice from their FA. According to Accenture, “Research confirms that clients not only demand more data transparency, they also want to be able to validate the advice they receive. In fact, incumbents that try to restrict access to data risk disintermediation.” Millennials don’t like to be left in the dark, so make it easy for them to enlighten themselves. One popular solution is to develop an investment app for clients to have unrestricted access to their portfolio wherever they are.

  2. Engage with clients and prospects through digital channels

    Another element of daily life that’s more prominent with the younger generation than baby boomers is social media. This offers a way to identify, isolate and engage with clients, thought leaders, and prospective clients. Frequent interactions with clients and engaging, educational opportunities have the power to increase investor trust. Of the companies that utilise digital channels for engagement, 73% experience improved client interactions, with 77% benefiting from better client retention and 74% increasing their assets under management.

  3. Utilise Analytics

    One of the most important features of the digital revolution has been the rise of data for analytics. Leveraging analytics can give businesses a complete view of their client, allowing FAs to make personalised and meaningful recommendations. By analysing a client’s circumstances, such as occupation, tax status, preference of risk etc., FAs can tailor investment advice.

Consider design, branding, and content

Dealing with their clients’ finances, it’s essential that wealth management firms present themselves as trusted and reliable brands. This can’t be done if the company website isn’t up to User Experience (UX) expectations. A designer can help with a website by not only making the user interface look the part of an industry leader, but also offering the best UX.

To instil confidence in clients, wealth management needs a branding strategy in sync with their digital transformation that will make their name synonymous with returns on investment. Part of this strategy could include website content that is regularly updated. To position a brand as a thought leader, firms should produce original content that offers opinions, industry analysis and news updates. A brand can build industry authority and investor confidence with a thoroughly considered branding and content strategy.

The next generation of HNWIs will be expecting the wealth management industry to have embraced digital transformation. It might sound daunting, but it needn’t be; a digital design agency can make the process seamless and efficient. We offer businesses free website evaluations with professional feedback on what improvement is needed and why. If your firm is interested in this no-obligation service, we’d be happy to complete an evaluation.

Of course, if your firm is about to incorporate digital into your strategy, it’s worth considering the impact of design on finance technology. If you’d like to discuss your technology options please feel free to contact us and we’ll get back to you ASAP.