The prospect of long-awaited better times and a
growth-focused era is showing promise as we finally see some relief from the
relentlessness of this global pandemic. While it is my personal wish that Zoom
happy hours at wealth management firms land in the Covid-19 history bin, we
have to give it up for video conferencing and virtual meetings.
In the early months, many wealth management firms
experienced technical obstacles as employees transitioned from office
headquarters to being fully remote. Yet, necessity led to resourcefulness and
challenges were relatively short-lived.
Not exempt from the turbulence and impact, financial
advisers must surely be contemplating the shifts that enabled continuity and
sparked growth, still indispensable in a post-pandemic world. It’s about
choices; face-to-face meetings will again be an option, but virtual has been
test-driven and is a great alternative. Motivated by need, behaviors among
consumers changed with increased adoption of fintech and mobile banking apps.
There is one break in the clouds that has emerged from this
time — the rapid advancement of technology that is now better serving consumers
of wealth management and a presumption of continuous forward movement. As new
generations of investors enter the scene, demand for advisory services will
rise, as will expectations about what advisers can deliver. Understanding,
harnessing and mastering these shifts will be key to adviser growth in the
decade ahead.
FINANCIAL ADVISER VS. STOCK PICKER
With an ever-growing array of low-cost digital advisory and
retail investing options emerging for do-it-yourselfers, the perceived value of
advisers who lead with stock selection and portfolio creation is waning.
Consumers are increasingly seeking out advisers who can answer the fundamental
question of whether an investment goal can or will be realistically achieved.
Advisers who continue to limit their scope may lose ground
to their competitor counterparts offering more holistic and outcome-oriented
approaches. There are many factors driving this shift — the decline of company
pensions, extreme capital market and geopolitical volatility, and persistent
doubt looming around the long-term solvency of Social Security. Increasingly,
clients are seeking out financial advisers who offer empathy and sincerity and
can restore informed confidence that brighter financial days lie ahead.
PERSONALIZED CUSTOMER EXPERIENCES
To thrive, versatility and expansion of purpose is mission
critical for today’s financial advisers; investors want a coach who can provide
comprehensive services and support to fit their unique life needs. Advisers
must also be poised to provide personalized context and commentary on how the
capital markets and global environment tangibly impact their clients’ goals,
dreams and long-term investing aspirations. As this is a colossal ask, many
advisers are electing to focus their time on client service and delegating
stock selection to third-party asset management firms and investment
strategists. In this scenario, investors can receive answers to their critical
top-of-mind questions, enabling advisers to focus on delivery of advice that
can yield better outcomes.
There’s no doubt that investors today expect a very
different experience from what advisers once provided. We know why — daily
digital interactions with platforms like Amazon, Spotify and Netflix are now
commonplace.
Consumers are accustomed to highly personalized, intuitive
experiences. These non-financial platforms have arguably done more to influence
the expectations of investors than any platform in fintech today.
Advisory clients want access to solutions and investment
recommendations that are grounded in their individual concerns, societal causes
and core values. Consumer demand for this type of personalized advice can
easily outstrip an adviser’s capacity unless new technologies and smart
approaches that help automate aspects of the personalization process are
adopted.
In the same way Netflix provides recommendations based on a
viewer’s history, advisory platforms serving up solutions informed by data that
reflects a client’s uniquely personal story will become the norm in the near
future.
WEALTHTECH REVOLUTION
The third major trend in wealth management is the one that
enables and drives the first two: the rise of true client-centric wealth
technology. The direction of financial technology over the years has gone from
providing back- and middle-office solutions to a front-office focus that
prioritizes the adviser/client relationship. Fintech platforms are now
implementing AI to automate much of the time-consuming manual work of wealth
management, freeing up advisers to focus on data-driven solutions and direct
client conversations. And this facilitates democratization — what was once
known as white glove service, exclusive to high net worth investors, can now be
accessible to others. But to achieve this, advisers and firms must modernize
their IT infrastructure, automate core processes that generate data for
analysis and use AI to minimize human effort.
Employing fintech does not end with the back- and
middle-office processes. Advisers also need to home in on front-office,
client-focused digital offerings. Partnering with fintech firms is a logical
option for advisers who lack in-house wealthtech capabilities. In parallel,
they should also assess internal capabilities, with an eye on developing their
human capital.
Apps will be crucial for advisers as they aim to enhance and
digitize the investor experience. Apps that can be easily accessed via mobile
devices also allow for omni-channel client experiences and a sense that their
portfolio and its manager are available at the swipe of a screen.
According to J.D. Power, clients who interact with their
adviser’s app are more satisfied than clients who don’t use an app or who don’t
have one available to them. However, the quality of the app is vitally
important; firms and advisers must offer apps that deliver robust experiences,
and are secure and easy to use. The research also shows clients are least
satisfied with wealth manager apps versus those offered in other areas of
financial services, such as credit card providers, banks and insurance
companies. Getting the app experience right will go a long way in building and
retaining client relationships.
From automating processes and accumulating meaningful data,
to formulating insights and planning for specific client goals, technology
investment and adoption is key to advisers’ getting out front with a commitment
to customized, concierge-level service for every client. The future of wealth
management is about creating empathetic experiences for investors. After the
year plus we’ve all had, I believe those in the noble profession of wealth
management and advisory get it.
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