Crossing the digital divide in wealth management | Job Binary


Traditional wealth management has often been characterized as a digital laggard due to regulatory agendas, outdated technology and an aging workforce. Industry leaders see the digital divide as an opportunity to reposition and differentiate their firms to respond to changing expectations and demographics.

Digitally averse customers are changing rapidly, and early adopters expect a better online experience. According to a global survey of 800 high net worth investors conducted by Aon and FactSet, only 27% of respondents rated their wealth managers highly for their digital experience. Overall customer satisfaction scores for digital solutions ranged from 7.1 to 7.6 out of 10 across global geographies, indicating room for improvement.

Most experts see the future of wealth relationships as a hybrid mix of physical and digital interactions. While this is good news for the traditional wealth industry, we know that clients of all demographics expect a better online experience for aspects of the relationship that are more effectively delivered digitally. Firms that fail to deliver this hybrid balance risk falling on the wrong side of the digital divide.

Since 2008, the regulatory agenda has often been cited as one of the main challenges preventing firms from making digital investments. In ThoughtLab’s recent Wealth and Asset Management 4.0 research report, digital identity ranked last among 12 advanced digital developments. Firms that rely on analog and human processes for compliance remain industry laggards, as it is virtually impossible for advisors and firms to remain compliant without leading digital technology.

The biggest demographic trend facing our industry is the generational transfer of wealth, estimated at $1 trillion between 2016 and 2026 in Canada. Research shows that 88% of Gen Xers and Millennials who have inherited this wealth do not plan to stay with their parents’ advisors or firms. Experts suggest a number of strategies advisors can use to reduce or eliminate this huge risk, and not surprisingly, technology adoption is at the top of the list. Advisers and firms must offer a digital client experience that meets the same standards as the apps their young clients use every day. Channel selection, which may not be quantitative, must also be supported for all aspects of wealth interaction.

A firm’s mindset is also a critical ingredient for digital wealth leaders. Teams that understand the technology, the language and the behavior of new client demographics ensure that firms stay comfortably on the right side of the digital divide.

David Reeve is InvestorCOM Inc., a provider of compliance technology to the wealth management industry. general director.



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