We have established that the wealth management industry is facing a new kind of client—one that’s tech-savvy, well-informed and empowered. Today, I want to examine how digital technologies are helping wealth management firms and meeting the needs of these modern investors.

Change is in the air

The good news is that firms have recognized that their clients are changing. A recent Accenture survey found that nearly 80 percent of financial advisors now believe that digital is an essential part of the client-advisor relationship. Nearly 70 percent are already using social media, and over half are in favor of providing self-investment tools to their clients. Meeting the digital demands of investors has become a top priority for most firms.

Competitors are taking notice

Wealth management firms aren’t alone though. Several groups have taken notice of the changing wealth management landscape and set their sights on a piece of this market. We’re seeing universal banks like Deutsche Bank, Credit Suisse and UBS renew investment in wealth management segments, and regional players use digital technologies to provide existing clients with competitive wealth management services.

But the big story has been the recent proliferation of financial technology or “fintech” start-ups in the online advice space. These robo-advice businesses provide low-cost, fully automated digital investment services that have captured the attention of modern investors. According to our research, as many as 25 percent of investors would switch firms to gain access to digital tools for financial planning and scenario analysis. Even more alarming is that 41 percent of advisors admitted to having been unable to provide tools requested by clients.

A new model is taking shape

As a result of these developments, we see a new wealth management model beginning to taking shape. The industry’s most successful firms will offer:

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Read the report.
  • Digital and traditional channels, when and where clients want them.
  • Low-cost index and market-tracking products, alongside higher risk/return options.
  • A range of services, ranging from digital tools to advisor advice.
  • Flexible “pay-as-you-go” models that let investors engage advisors selectively.

Most important, they will be transparent with their clients. According to our survey, quality of advice and performance are the two most important factors in determining an advisor’s value. As digital technologies make it increasingly easy for clients to learn the tricks of the trade, and for small firms to provide similar services as their bigger counterparts, transparency is poised to become a key differentiator.

For more on how digital technology is changing the client-advisor relationship, read “Wealth Management for the Modern Investor: How Digital Technology is Changing the Client-Advisor Relationship

Want to discuss how your business can meet the needs of modern investors? Contact me, Kendra Thompson.

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