While the wealth management industry is ideally positioned to leverage digital technology to improve efficiency and responsiveness, only 25% of wealth management firms globally offer more than email access to clients.
According to the average client-satisfaction scores, typically, only one-third of wealth management clients are very satisfied with their firm’s service, dropping to just more than 22% of clients whose assets exceed $10-million. Wealth management is regarded as one of the sectors most vulnerable to disruption, says PwC Africa Financial Services Strategy partner Jorge Camarate.
“The perception that high-net-worth individuals (HNWIs) exclusively prefer face-to-face interactions is incorrect. PwC’s survey – Why wealth management can’t afford to miss the digital wave – found that HNWIs across all age groups are receptive to using technology.”
He adds that 69% of HNWIs use online and mobile banking tools and 40% use online means to review their portfolio or investment markets, while more than one-third use online services for portfolio management.
A total of 85% of HNWIs use three or more digital devices and they typically have high levels of digital literacy. Therefore, more than a fifth of wealth management businesses are believed to be at risk of disruption.
However, HNWIs advocate paying for expertise and professional advice. Therefore, the wealth management industry can implement digital technologies to bolster client services and satisfaction, reduce costs and add new revenue streams, Camarate emphasises.
“HNWIs are a customer segment that is particularly demanding and difficult to please, but they do not use a wealth manager purely for convenience, believing strongly in the value of paying professionals to do a better job than they can.”
Wealth management firms that implement a digitally enabled business model will be able to deliver winning propositions, combining the ‘human touch’ that many institutions pride themselves on with the wealth of opportunities presented by digital technologies, he adds.
“[One] of the concerns of wealth management firms regarding the adoption of digital technologies is that they cannot afford to adopt experimental technologies that might present a risk to clients. However, digital technologies are well established and are no longer experimental. Further, regulations will drive wealth management firms to adopt more digital technologies to meet regulatory requirements.”
Camarate advises that wealth management firms fundamentally change their business models and create a strategy built on technology to meet the future needs of HNWIs.
The first step that wealth management firms should take is using digital technologies to reduce labour-intensive processes such as manual capturing and paper-based work, and to align processes with regulation.
The second phase of digitisation will be characterised by using technology and data to improve advice to clients, automate further processes and enhance value-added services.
With a holistic view of clients achieved, wealth management firms can leverage their trusted adviser status to provide clients with guidance beyond financial advice, which can also be charged for, thereby creating new revenue streams.