Wealth management has traditionally been affected by a degree of tunnel vision when it comes to digitalization of the client experience, focusing mainly on younger, mass affluent investors as the key prospect pool.
However, all types of investors, from mass affluent to high net worth and across all age groups, are demanding a more digital experience from their wealth advisors. The risk of not responding to their needs is real considering that in the last year almost one in three of all investors surveyed (30%) and a staggering 55% of billionaires switched wealth management providers or transferred significant funds to other wealth managers,
The study confirms that the need to access services digitally is largely consistent: 89% of investors from every group analyzed — high/ultrahigh net worth individuals, millennials and baby boomers — declared their preferred communication channel in the future would be digital and specifically via mobile apps. (Websites also remained popular, with 74% of HNW individuals indicating this would be one of their preferred channels, as did 67% of baby boomers and 62% of millennials.)
Perhaps the most striking aspect of these new digital attitudes on the part of clients concerns virtual conferencing. Prior to the COVID-19 pandemic and the forced social distancing it imposed, the sector relied on in-person meetings to provide its clients with the type of white-glove service they required.
But newly acquired comfort with digital meetings means that more and more investors, across all demographics and asset brackets, would prefer to meet virtually in the future rather than in person. Specifically, 47% of baby boomers report that they would prefer to be in contact with their wealth advisors via the webcam in the future. Forty-six percent of millennials, and perhaps surprisingly, 41% of UHNW clients, agree.
Balancing act
When it comes to the highest-AUM clients, however, wealth managers will need to carefully balance this demand for digital with demands for complex specialized investment vehicles and multijurisdictional practice. It is paramount that wealth management businesses and advisors get the channel balance right with the optimal emphasis on digital, especially since the trend for switching advisors or transferring funds to multiple managers is set to continue with 44% of investors declaring it is their intention in the next two years.
In addition to changing providers to pursue better overall investment performance (53%) and to access a wider range of products (42%), as would be expected, a lack of digital presence is also clearly an important issue for UHNW clients, with 34% of those investors indicating this is why they would switch services. (Reasons for switching other than digital presence listed by investors include better personal service, access to holistic financial planning, personal contact or trusted advisor, a fee structure better suited to their needs, lower fees, a desire to directly manage their investment, a culture more aligned with their values and access to social impact investments.)
These results depict an industry that is undergoing a customer-led metamorphosis, one in which the balance between touchpoints is dramatically redressed. For firms to stay competitive, a compelling digital client experience is no longer just a nice-to-have narrowly targeted at the demographic of millennials. All types of investors, including UHNW individuals and older investors, require more digital tools and services whether because video conferencing helps them juggle busy lives or because they would rather perform some activities in self-service mode using an app, the survey showed.
The assumption that older, wealthier customers only want face-to-face interactions has been quite clearly debunked and requires action immediately. While over 40% of respondents do say they would prefer in-person interactions in the future, a large majority are changing the way they envision their relationship with wealth management. Remaining anchored to outdated assumptions and ways of doing business could prove risky business.
Improving the overall digital experience should start with providing a seamless digital onboarding process that is simple, intuitive and efficient. At this key “first impressions” stage, offering the right range of effectively managed touchpoints helps assure the investor they have selected an advisor that understands their needs and values their preferences and time.
