Wealth manager digitalisation will be key to getting ahead

By Nakis Efstathiou
3 March 2020

Competition in the wealth management industry is heating up.

As the latest annual WealthBriefing and SS&C Advent Wealth Management Technology and Operations Trends report observes, we’re seeing activity intensifying at both ends of the spectrum: ongoing consolidation at the top level, as well as increased competition from a growing number of boutique, local and emerging players.

Wealth management remains a highly-fragmented sector with a myriad of participants, so there is all to play for. But with so many competitors, it is imperative for firms to differentiate themselves. A targeted, digitalised client service offering is one area that agile, progressive wealth managers are seeking to take advantage of.


Digitalisation has a long way to go

Much of the sector is still in the foothills of the digitalisation journey. Almost one third of respondents to the WealthBriefing/SS&C Advent survey said their organisation is only at the earliest stages of digitalisation. And while a quarter gave their organisation a “good” rating, no participants reported their firm is as digitalised as it wants to be. (Read the full report here).

Clients’ digital expectations and demands are transforming rapidly. All generations, not just millennials and the younger investors, now expect a digital-first experience according to a new Refinitiv/Aite Group report. Client servicing activities such as managing daily tasks, account opening and onboarding are among the most important areas where wealth managers need to provide digital capabilities, the report found.

Clients want products and services that meet their specific situation and goals. And they want to interact with those services how and when it suits them, whether it’s researching products online, opening an account on their laptop at breakfast, checking balances on their phone, or speaking with an advisor when they’re out for a walk.


Personalised offerings demand effective client segmentation

High-touch engagement and a truly personalised client experience are increasingly crucial to success. According to the Refinitiv/Aite Group report, 90% of the wealth management firms have recently or are currently reviewing and revising their segmentation models to ensure they create more effective client personas that enable the firm to tailor their offerings to the next generation.

Of course, this digitalisation shift takes time and investment, and however sophisticated the front-end may be, it will account for nothing if it’s not integrated and properly supported by the back end infrastructure.

Done well digitalisation is a true differentiator. Happier, engaged clients are more loyal clients, and digitalisation can help drive internal efficiency improvements. Self-servicing reduces processing costs and frees up staff to focus on more value-adding tasks. Advisors can limit (and ideally eliminate) the time spent servicing high-touch, low-value customers and redirect their efforts to more profitable ones.


Digital leaders gain early mover advantage

We’re seeing the divergence between digital leaders and laggards becoming increasingly pronounced—both within and across national markets. For instance, the WealthBriefing/SS&C Advent survey noted that deploying tools to create a digital user experience is well established and expected in the Nordics and Asia-Pacific. Elsewhere, digitalisation is as much talk as action. In part that may reflect weaker client demand, but culture and legacy technology are the real barriers.

Wealth managers with big digital ambitions therefore have an opportunity to carve out a leadership position. By delivering significant client experience enhancements they will be in a far stronger position to justify higher fees and maximise the value of each customer.