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Time for wealth management to ‘indulge digital minds’

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Time for wealth management to ‘indulge digital minds’

‘Anything that can be digitised, will become digitised,’ according to innovation strategist Anders Sorman-Nilsson.

Speaking at the Wealth Manager Conference & Awards earlier this month, Sorman-Nilsson (pictured) said wealth managers need to ‘indulge the digital minds and analogue hearts’ of clients.

‘Digital is fantastic for ensuring we attract new business, and analogue is fantastic for ensuring we retain customers as well,’ he said. 

So how can wealth managers change their business models to accommodate the rise of digital? Is it only about launching a robo-adviser or is there more to it than that?

Digital disruption is no longer a new phenomenon in wealth management. There was a time when the industry may have resisted using new technologies, but with every generation becoming accustomed to using mobile technology in all parts of their lives, it seems resistance has become futile.

And even the banks many would consider to be ‘old school’ in terms of both their thinking and systems are catching on.

While UBS, the Swiss banking giant, recently launched an online wealth manager targeting a lower end of the market – opening its doors to a new segment for the bank – Coutts declared that it will be spending £20 million a year on digital investment.

It is good news that they are investing in their systems because Sorman-Nilsson pointed out that fintech players can disrupt global banking revenues of $4.7 trillion (£3.8 trillion) and profits of $470 billion, based on a JP Morgan study.

Meanwhile, Rathbones, Brooks Macdonald and LGT Vestra last month signed up with technology firm WDX to develop their own digital platform for signing up clients.

Branding robo-advisers a ‘force to be reckoned with’, Sorman-Nilsson said: ‘We are seeing that robo-advice platforms are expected to have $489 billion in AUM by 2020.’

Transforming the client journey

Sorman-Nilsson also highlighted how companies can transform the client journey through a combination of digital and analogue. Adding that we are now ‘entering the transformation economy’, he argued that it is no longer enough to just have a great customer experience.

‘We have to be omni-channel in the way we design educational material for our clients. Financial savings and investments should be an effortless experience where we’re highly contextualised and personalised with our customers and we sprinkle a bit of magic for them, enabling them to reach their financial dreams.

‘The customer journeys and the client journeys used to be simple and linear. They are now no longer so.

‘That journey now goes between analogue and digital touchpoints. You need to think about how you recommend and add value to the customer at every stage of that customer journey, be it via blogs about the best financial management app or whether its video or tutorials, e-papers or thought leadership papers.’

Speaking at the same event, data journalist, David McCandless (pictured), pointed out that normal tools of communication that wealth managers or individuals in financial services use to generate data often do so in a very generic format, which can lead to clients becoming disengaged.

Therefore, he said, companies need to begin by considering the colour, typology and style of how they present any data.

After those initial considerations, they need to figure out what types of stories they actually tell with that data. He especially emphasised how important it is to use data in ‘making the abstract real’.

Technology consultancy Finsol Systems also highlighted the importance of finding a middle ground between digital and analogue as it urged wealth managers to embrace video meetings as an alternative to physical face-to-face catch ups.

‘Physical meetings will continue to be an important way that advisers interact with their clients, but advice firms need to evolve how they deliver advice to reflect the digitally connected, mobile technology world,’ said Tim Morgan, Finsol’s managing director.

‘That means giving clients the option to have a virtual face to face meeting instead of, or in addition to, physical meetings,’

He added: ‘Video communications and digital screen-based collaboration will become mainstream over the next few years. Any financial adviser that doesn’t offer their clients the option of high quality virtual advice meetings as an integrated and carefully considered part of their client proposition will be left behind.’

Sorman-Nilsson also advised wealth managers to ensure that the way they transform their businesses to adapt to the digital world is seamless for the end client.

He added: ‘Whatever you do to plan customer experiences for the future, must you indulge our digital minds and our analogue hearts.’

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