Wealth management firms have spent millions deploying new apps, robo advice platforms and even facial recognition software in a bid to offer clients better service.
But one goal sometimes proves elusive: keeping the end product simple for the investor.
"Firms struggle with it because clients often don't have simple problems ― they are complex," says Mike Sha, CEO of SigFig and a member of a panel discussion in New York.
The digital advice market could grow from about $65 billion today to more than $400 billion in client assets by 2018, according to a new report.
His and other panelists' comments highlighted the balance wealth management firms are trying to strike as they look to assimilate quickly emerging technologies into revamped business models.
"Everyone, from advisers to clients, want things to be simpler. And that puts additional pressure on design," says Steve Scruton, president of investor communications firm Broadridge Advisor Solutions, which hosted the event.
"Firms struggle with it because clients often don't have simple problems," says Mike Sha, CEO of SigFig.
JUST THE BEGINNING
The drive for simplicity is also rippling into how the industry adapts to the ongoing fintech revolution.
"Digital strategies aside, client assets on digital advice platforms will grow substantially over the next couple of years," according to a new report jointly conducted by research firm Aite Group and Broadridge.
The digital advice market could grow from about $65 billion today to more than $400 billion in client assets by 2018, according to the report.
"Everyone, from advisers to clients, want things to be simpler. And that puts additional pressure on design," says Steve Scruton, president of Broadridge Advisor Solutions.
In particular, the so-called hybrid model, combining human and computer-driven advice, is expected to become more prevalent. Advisers plus technology can do more than either can alone, Scrutin says.
Ed O'Brien, CEO of eMoney Advisor, says his firm is trying to determine at what points a digital-first client would want to talk to an adviser.
"The successful hybrid will anticipate the paths where the client will want to break off and talk to an adviser," O'Brien says.
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"We're not going to proscribe any way for clients to access us," says Mark Jordahl, president of U.S. Bank's wealth management group.
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Executives think algorithmic assistants will be a better solution for wealthy clients than mere software allocating assets for the masses.
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The robo advice firm says it already has a number of customers with more than $10 million each.
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Indeed, the study by Broadridge and Aite Group concluded that successful firms "will focus their efforts on finding the sweet spot between high-tech and high-touch services."
"It seems like robo is table stakes now," Alois Pirker, director of research at Aite Group, said during the Broadridge panel discussion.
Artificial intelligence is also set to add new capabilities to firms' digital arsenals. O'Brien and others noted the technology has been around for some time, but the data needed to feed AI-driven programs has only more recently become widely available.
The panelists noted that other technologies, such as voice command, have yet to have a real impact on wealth management. It's a sign that the digital revolution it just beginning to take shape, SigFig's Sha says.
"We're probably just two or three years into this and it could be a 20 year trend," he says.
