Why wealth managers should embrace a technology-led approach

Why wealth managers should embrace a technology-led approach

Sam Roberts 5th April 2022 Sam Roberts, Chief Marketing Officer, Delio

The events of the last few years have had a transformative impact on the importance of technology in wealth management. The global pandemic initiated a tidal wave of digital transformation, with the majority of financial services organisations fast-tracking projects and allocating increasing budgets to technology-based initiatives.

 This rapid change in approach has created significant opportunities for financial institutions, with bureaucratic barriers and ‘decisions by committee’ banished in favour of swift analysis and rapid implementations. Nonetheless, the recent report ‘Technology traps that wealth managers must avoid, clearly identifies that this digital revolution has also created challenges that firms must address.

This is particularly true for wealth managers and asset managers. Historically, this sector has been identified as highly resistant to change but the report highlights three key reasons why the adoption of digital tools can no longer be ignored. So, after years of under-investment, why are wealth managers finally embracing the benefits of a tech-led approach?

Clients are demanding better service from their advisers

While many areas of financial services have lagged behind digitally, wealthy clients have seen how technology can greatly enhance their experience with other services such as travel and hospitality. As a result, they now expect the organisations managing their wealth to be able to service their needs at their convenience – that means 24/7 access to information, remotely, and on the go. In short, the days of only dealing with a relationship manager face-to-face are long gone.

However, the transition from legacy processes and manual operating models is not an easy one. Simply digitising how clients access information and engage with their wealth manager is not enough. They expect the experience to be seamless, intuitive and highly personalised. This does not mean that wealth managers can afford to address their digitisation strategy in a half-hearted way or purely from the perspective of wanting ‘to appear modern’. Instead, it is vital that they embrace technology to deliver tangible benefits not only for their clients, but also themselves.

When implemented well, digital tools will enable wealth managers to enjoy access to data that could help them to transform the quality of their client service. Increased personalisation of services, insights based on real behavioural trends, and the ability to engage with clients in a more targeted and efficient way are just some of the ways in which advisors could benefit. In the long-run, this should manifest itself in increased revenue and share of wallet.

Engagement strategies need to match new client behaviours

The enforced switch to digital communication over the last few years shows little sign of changing. While many wealth managers would never have envisioned video calls and WhatsApp messages as key tools for engaging their clients just a few years ago, the use of these channels reflects how clients now want their “wealth management integrated into their daily lives rather than an annual appointment or chore”, according to EY, the co-authors of the report.

Investor demographics and their engagement preferences are also playing a growing role in this new digital mindset. The next generation of young, entrepreneurial investors is becoming an increasingly important segment for wealth management firms. With this in mind, the industry needs to adapt its engagement strategies to reflect how these ‘digital natives’ prefer to consume information. Dinners at private members clubs and rounds of golf are unlikely to be the way to engage with younger clients; these are people who travel extensively, want to access information late at night and on weekends, and prefer to communicate through instant messaging rather than formal meetings.

Implementing a digital engagement strategy that meets the needs of the new generation of wealth creators is essential from a client satisfaction perspective. However, doing so also opens up significant opportunities for wealth managers. Not only does digital engagement offer quicker and more frequent access to clients, but it also has the potential to create a rich vein of data that can be used to make more informed decisions. For example, real-time analytics could help you to identify when is the best time to engage with a client over the phone and maximise the commercial value of your conversation. 

Clients are placing more value… on values

Environmental, social and ethical matters have become a global discussion point in recent years. This has meant that wealth managers have quickly had to adapt to ensure that they can satisfy both their clients’ financial and ethical goals. 

Adopting ESG, however, isn’t enough. The increasing importance that today’s investors place on sustainable behaviour is mirrored in the way that they do business, as they extend this scrutiny to the way their advisors operate. This could be as simple as their approach to using technology as a way of reducing unnecessary travel for client meetings, or as complex as how they support clients in meeting their own impact investment goals.

EY report that 63% of UK wealth clients have sustainability goals, but only 44% believe that these goals are understood by their advisors. Closing this gap will be an important challenge for wealth managers given that clients have an increasing expectancy that their advisors will be able to support them in meeting these objectives.

Perhaps most pertinently, a more integrated use of technology offers the opportunity for wealth managers to service each of these client concerns more effectively. While the move from traditional, manual operations to tech-driven automation will not be painless, advisors cannot deny that clients expect the transition to arrive sooner rather than later. And for wealth managers, the increasing use of technology promises to personalise service delivery and create greater opportunities for insight-led decision making, both of which should result in commercial benefits. One thing is clear – wealth managers that fail to adapt will be left behind in an increasingly competitive and tech-enabled sector.

For more information on Delio’s private markets technology and how we can help you take a technology-led approach, click here.

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