Wealth Management: Capitalizing on the Transformational Potential of New Technology

Greg King, SVP, Wealth Management Strategy, FactSet

Greg King, SVP, Wealth Management Strategy, FactSet

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.

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.

Making Digital Pay

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.

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 advice that is more sophisticated.

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 challenging traditional thinking 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.

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.

A byproduct of today’s data-driven world is the growing importance of visualization

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.

Disrupting Advisory through Design

For wealth managers, using design and visualization to add value and generate trust is vital to remaining competitive. Challenger banks and robo-advisors have altered the relationship management model by offering online-only wealth management at scale. While these solutions will not be attractive to all clients, their very existence is changing expectations about what clients want to see when it comes to a 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 information in front of them. This is a clear priority for wealth firms, given that two thirds of investors feel that their wealth managers should be doing more to visualize the information they provide.

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

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

Empowering Client Service with Personalization

Used appropriately, 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.

While data security remains important, the evolution in client behavior suggests that investors are gearing up to expand their relationships digitally. In exchange for sharing sensitive information about their personal lives, our research shows that 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 will allow wealth managers to build a more holistic picture of their clients and better enable advisors to deliver on wealth goals.

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

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