Several months ago I introduced you to our paper focused on how digital technologies promise to change the industry’s traditional business model. Now, it’s a topic more top of mind than ever. Digital is not going away, and those wealth management firms that respond swiftly can expect to benefit from better client outcomes and more engaged prospective clients sooner.

So, what’s stopping many from making a move? Legacy technology platforms are often to blame for the lag, as is the idea that just digitizing operations and marketing will result in becoming a digital business. Today, we’re going to expand on the three steps to digital success, which we previously touched on.

Empowerment—building trust by making clients better informed

Our Generation D research confirms that clients not only demand transparency when it comes to information, they want to be able to validate the advice they receive. Wealth management incumbents that try to restrict access to information risk disintermediation, and don’t have a leg to stand on with today’s clients. No longer will a firm’s heritage and brand name be sufficient.

The key to success is to team with clients—don’t just make them recipients of information, build their trust. To do this, firms need to provide investors with transparent access and educate them about how to interpret and use the data. One leading player digitized workflows to enable clients to access services more swiftly and efficiently. When the firm did this, it reduced errors and provided advisors with better insights into client needs.

Engagement—enabling a more collaborative relationship between client and advisor

Wealth management firms, your challenge is to change the focus from tracking individual returns to monitoring progress against financial goals over time. Digital tools make constructing, updating and monitoring the financial plan much easier. Putting capabilities in the hands of clients will enable them to interact with their financial plan, model scenarios and stimulate returns. One leading player offers a customizable, online program that enables clients to integrate financial information in one place and test scenarios that can affect their financial plans.

On the flipside, empowering advisors with detailed client information can make them more readily and directly accessible and thus even more responsive to client needs. Gaining a 360-degree view of the client enables advisors to make more meaningful individual recommendations and go a long way to enhancing trust with existing clients. Gamification techniques could also be particularly effective with prospective clients. One disruptor, for instance, helps prospective clients learn about trading through the creation of a virtual portfolio that users can create and manage for themselves, while competing against members in their social networks. Once familiar with the capabilities and experiences of the firm, users can start investing real money.

Agility—critical to becoming a disruptor and responding with imagination

Read the report.
Read the report.

Some traditional companies are being squeezed out because they simply aren’t agile enough. But others are responding to the threat with imagination. Consider one retailer that has begun enabling money transfers—effectively launching itself into financial services and banking. A few wealth management incumbents are following suit by creating “innovation labs” to prototype, incubate and test new ideas, fostering a culture of innovation from within. That kind of culture will be critical to the disruptor mindset that incumbents need to prosper in the digital age.

Not every new idea or approach will succeed. Start with a clear digital strategy focused on better customer outcomes. Pick key areas of focus—and change them if necessary. By adopting an agile, innovative mindset you’ll be able to leapfrog the competition, redefine your market position, and generate net new value for yourself and your clients.

To learn more, read:

Digital Wealth Management: Reimagining Wealth Management for the Digital Age: Empowerment, Engagement, Agility.”

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