5 things wealth management firms get wrong about digital transformation

The wealth management industry has been called one of the “least tech-literate” sectors of financial services, and it’s easy to see why. More than any other financial product, wealth management is a high-touch business that relies on personal service and interaction.

When we think of the customers who seek wealth advice, we might think of people who are less inclined to be digitally savvy. Or people who think a meeting or phone call is more personal than if you contacted them via social media.


Actually, the demographics of wealth management clients are changing – and will continue to change in the coming years. But more importantly, client expectations are changing. The same forces that drove innovation in consumer banking are now pushing wealth management to the cusp of a digital revolution.

For traditional wealth management firms, going digital is a vast opportunity to realize greater efficiencies, manage costs and transform their roles with — and value to — clients. Although the industry unanimously agrees on the importance of digital transformation, few organizations get it right.

Why does this happen?

Don’t let them fool you

Here are five myths that hold wealth management firms back from successfully embracing innovation.

Myth 1: Customers don’t want to go digital

Half of wealth managers said their firm’s ability to go digital and take advantage of new technologies is hampered by lack of client demand, according to a study by Thomson Reuters. That’s probably why only a quarter of wealth managers currently offer digital channels beyond email, as stated in a survey by PwC.

However, the same study revealed that high net worth individuals (HNWIs) — investors with liquid assets worth greater than $1 million — across the generational divide are comfortable with technology. In fact, 85 percent of HNWIs across all age groups use three or more digital devices daily, and most clients expect their wealth managers to offer the same convenience and personal experience of online and mobile banking.

Unsurprisingly, HNWIs under 45 years old are more interested in managing investments online. In the next few years, some 80 million Millennials will come of age financially to make up what is likely the largest, wealthiest generation in U.S. history – bringing their digital appetites with them.

Myth 2: Wealth management firms don’t need to go digital

Wealth management has managed to ignore the digital transformation wave so far by focusing on human capital. Managers spend years building trust through constant contact and collaboration, and traditionally this meant meeting clients to provide physical portfolio updates and collect relevant documents.

With digital and collaborative technologies, the need for this paper exchange is eliminated. And as mentioned, customer expectations are shifting towards quick, efficient delivery of services. If a client needs to visit your office to open an account, you’ve probably already lost him or her as a customer.

In a world where anyone can open a micro-investing account from their phone in under five minutes, wealth management firms need to make it a priority to provide a seamless client experience. This begins with implementing digital processes to enable paperless onboarding.

Myth 3: Going digital is a high-risk, low-reward venture

Understandably, wealth management is a risk-averse environment where firms may be hesitant to embrace digital innovation. It does pose a dilemma for some wealth managers – to keep their existing less tech-savvy clients or go after new and younger clients via digital offerings?

Maybe that dilemma is a flawed theory, as younger clients present a revenue growth rate double that of clients above 45, according to PriceMetrix. For advisors and firms, failure to attract younger clients is a more significant risk in the long-term.

Further, firms that are digitally advanced report an 8.6 percent increase in revenue, an 11.3 percent rise in productivity and a 6.3 percent improvement in market share, as stated in a report from Oracle. Those that move too slowly stand to lose $79 million per billion dollars of revenue a year – and risk falling out of the race altogether.

Myth 4: Future customers want to do everything remotely

With the rise of robo-advisors — platforms that use algorithms to offer financial advice, at a fraction of the cost of a traditional advisor — you might think the future of wealth management is cold and robotic.

But technology cannot replace the value of personalized advice and service, and it would be a mistake to think that customers want to do everything remotely or online. In fact, the future of wealth management is more personalized than ever, with digital technology enabling a new kind of client-advisor relationship — with frequent touchpoints that take less time and effort, while advice can be delivered in real time.

Myth 5: Our current IT environment is sufficient to support the business

The reason most wealth management organizations fail to realize any business value from their digital transformation programs is not the lack of vision, but the execution. Going for the shortcut, these organizations pursue digital innovation as a feature-selection exercise, implementing stop-gap solutions that address particular problems or consumer trends as they arise.

As a result, organizations are left with digital capabilities that are basic, disconnected and insufficient to meet clients’ needs.

Content services for wealth management

To realize true business value from digital transformation, it’s important to innovate not just for tech’s sake. Wealth management firms can no longer afford to ignore the digital wave. Long-term success – and survival – depends on realizing the vision of using technology to complement and enhance the personalized service and expertise that clients expect.

Implementing a content services platform is a good first step in realizing this vision — as well as for immediate, measurable gains such as:

  • Giving employees access to the information they need when they need it
  • Enabling faster and more accurate service
  • Increasing customer satisfaction

To learn more, download our new ebook Overcoming the challenges of digital transformation in wealth management.

Steve Comer is the assistant vice president of financial services and insurance sales.
Steve Comer

Steve Comer

Steve Comer is the assistant vice president of financial services and insurance sales.

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