Wealth Manager: Go Digital Or Go Home. Here's What You Should Do

Published on Jan. 08, 2019

Artificial Intelligence, Machine Learning, robo advisors. Right now, they sound like buzzwords. But they’re certainly are not. Digital Wealth Management is here to stay.

Technology is changing the Wealth and Asset Management industry, and Financial Institutions (FIs) are beginning to adapt to this new situation that affects customers and corporations alike. Because going digital is not a choice anymore. It’s a market demand.

Companies big and small are working on it, but it’s wealth managers themselves that should be learning new skills and adapting to the new environment. Bear in mind that digital wealth management is not just about using online platforms or Artificial Intelligence. It’s about understanding that the landscape is evolving. Your customers expect a different kind of service, more tailor-made than ever before, and you should be working in that direction.

So - How should wealth managers change specifically? What old misconceptions about their industry should be left behind?

We have talked to some entrepreneurs behind the fintech companies that are disrupting the industry. For these companies, innovation is in their core. They have a pretty good idea of what’s coming and how should wealth managers adapt professionally to respond to these new needs. And these are their answers.

It’s time: Embrace technology once and for all

This is an easy one, but it’s key and should go first on our list. Jeff Heine is Chief Revenue Officer at Ascent RegTech: “Asset and wealth managers should wholly embrace technology that will help them do their jobs better -- whether that be in decoding investor and consumer behavior through predictive analytics software, or understanding and acting upon their compliance obligations through intelligence products like Ascent.”

“As the demographics change in terms of target customers, digitization is an expectation and not a nice-to-have experience. Integrating technology into their day-to-day workflows will increase their efficiency and output, freeing up more of their time to do the things only humans can do, such as building relationships, developing business, and implementing the wisdom gleaned from their technology backend.”

If you’re lost with technology, an excellent place to start is our article about innovation trends in the Wealth Management industry.

Don’t get us wrong. When we talk about embracing technology, we don’t just mean using it in your day-to-day. We mean understanding it (or, at least, trying to). For Sage Wohn, CEO & Founder at Agolo, tech fluency is essential. “It is one of the most important skills Asset and Wealth Managers can learn. This is simply the ability to participate in and understand technical discussions to better appraise their usefulness and fit for your use cases.”

Leverage your expertise

A common fear for professionals from all sectors is the likelihood of being substituted by tech. And, let’s be honest, it’s legitimate to be somehow scared. Artificial Intelligence, for instance, is expected to replace thousands of jobs. If you don’t believe us, take a look at this infographic:

artificial intelligence wealth management effectSource: Autonomous Research. Jobs at risk in the U.S. (by 2030)

Technology is expected to replace many jobs, but the “human touch” will always be necessary (and very much appreciated by customers). Consider what Milan Suri, Founder at Pensio, states:

“I believe it's key for wealth managers to constantly be on the lookout for ways to differentiate themselves. It looks like passive, ETF based strategies are here to stay. With that in mind, I think that wealth managers are going to have to think outside of the box to justify their fees and overall role. What's key is their specialized expertise in identifying value for money products and integrating products from multiple sources into a holistic plan for clients.”

“At Pensio, that's core to our strategy. In partnering with wealth management platforms, we believe it will help them stand out amongst their peers and deliver an exceptional retirement income strategy to their clients.”

Being customer-centric is the only option

In the Amazon era, businesses have become more customer-centric than ever. Online pure players (such as the above-mentioned Amazon or Airbnb) were the leading advocates of this idea. And, what a surprise - Customers liked it! They like being in control, and those high expectations on companies have spread to every other sector. Even in the Wealth Management industry.

 “Asset and Wealth Managers must change their communication mediums and methods to be excessively customer-centric,” says Chris Hutchins, Founder and CEO at Grove. “As consumers, Millennials have high expectations and are used to products and services fitting into their lives. They’re not interested in making time to stop into their local brokerage office. In fact, 88% of young adults would prefer to never set foot into a physical bank branch. The financial guidance they’re seeking fits seamlessly and conveniently into their lives. It comes from someone they can connect with easily — via email, text, video chat, etc. — outside of normal 9-5 business hours.”

Regain your customers’ confidence

“It’s no secret that there is a significant lack of trust and confidence in large financial institutions, dating back almost a decade at this point to the 2007-2009 recession,” says Hutchins. “To compete in today’s changing financial landscape, traditional Asset and Wealth Managers first need to understand that this next generation is completely different. Many consumers are skeptical about whether these institutions have their best interest in mind. As a result, there is significant work to be done in restoring trust. Being empathetic to customers’ needs and mindful of their skepticism is a great place to start.”

 Each company has their own way to regain that trust (or to build it from scratch). “At Grove, we make sure our clients get the advice they need, but work hard to deliver that advice in a  totally different way. Our advisors dedicate time to work with their clients 1:1 so they can understand their unique financial situation and be empathetic towards the things that are most important to them. It’s still financial planning, but it’s not the kind of financial planning you’d get from an old guy in a suit.”

Reinvent yourself

We know. “Reinvent yourself” might sound a bit overused. Something one of those so-called gurus would say to make you leave your 9-5 job, become a freelancer and move to Thailand. But that’s not what we mean. 

In Hutchins opinion, a skill that would benefit most Asset and Wealth Managers is a willingness to reinvent themselves to “better meet consumers where they are, and that doesn’t just mean digitally.”

“Many organizations build their brands solely around things like the number of years they have in the game, and a traditional approach to financial planning when that is the very thing that could be alienating the next generation of consumers. Brands need to overhaul and humanize their messaging to not only show they have the expertise and skills needed to do the job, but to highlight that they understand and prioritize what matters most to today’s consumers.”

Innovation in Asset Management is finally happening. Don’t be left behind.

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