To say that digital technologies will change the wealth management landscape is an understatement. In the coming years, digital technologies will not only change the way wealth managers advise and service their clients, they promise to change the industry’s traditional business model. In addition to responding to increasing client demands, firms must contend with new entrants, who are ready to respond to clients’ increasing digital demands. These disruptors are entering the market directly by leveraging open platforms, and they’re bringing operational excellence, product leadership and customer intimacy with them. The message is clear to incumbents: want to play—and win—in today’s digital age? Become a disruptor.
Digital disruption’s benefits are significant
For wealth management firms, the disruptive power of digital should be viewed as an opportunity, rather than a threat—the benefits include:
- Net new revenue streams.
- Brand reinforcement.
- New and expanded customer relationships.
- Better customer retention.
- Productivity efficiencies for financial advisors and the home office.
- Lower cost business models.
Becoming a disruptor: Not an option—a necessity
Today’s client expects a new kind of wealth management experience. In essence, they want more—more information, more personalization, more transparency and more collaborative service. Oh, and they want all of the above more quickly, efficiently and effectively. Wealth management incumbents have been relatively slow to deliver. Challenged by legacy technology platforms, even the boldest incumbents are at best fast followers. That’s a problem.
Generation D is making its impact felt in the wealth management industry. These digitally-empowered clients believe that their financial future is largely in their own hands. They use technology to seek out engaging, education experiences across multiple channels. And our Generation D research found them to be less trusting and more risk averse than those without such capabilities.
The bottom line: responding to the digital imperative is no longer an option for incumbents—it’s a necessity, and as digital disruption accelerates, an increasingly urgent one. Join us next week when my colleague Ashley Costa looks at the three steps to success in the digital age for incumbents.
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