COVID-19 has brought about a new era of digitization in wealth management. Technologies that were once just nice-to-haves are now urgent necessities for firms and advisors.
For example, now that remote work in wealth management is the “new normal,” it has become imperative that the wealth management industry adopt digital solutions like cloud-based document management in order to operate smoothly and competitively.
The question is no longer “if” a firm should adopt digital wealth management solutions, but “how?” and “how fast?”
“Things will not go back to ‘normal’ after a vaccine is found,” says Bridget McNamara-Fenesy, President and CEO of M Holdings Securities. “Everyone will recognize the power of digitization, and competition in this space will become even more fierce.”
To dive deeper into the future of digitization in wealth management, we asked financial services and financial technology leaders to discuss some of the biggest questions surrounding the wealth management digital experience.
What is the next phase of digitization in wealth management?
In the near future, the wealth management industry will shift to formless processes that are no longer based on a foundation of paperwork.
“Five years from now, all ‘processing’ in the wealth management industry will be digitized,” says Kevin Laraia, Executive Vice President of Enterprise Sales at Docupace. “No more paper applications. Even e-signatures will evolve into online confirmations.”
“The move away from forms needs to be a primary focus in the industry,” adds Chris Mills, Executive Vice President of Kovack Securities. “The technology exists to maintain client information electronically with proper security and verification. The manual gathering of information on forms needs to become obsolete.”
It’s going to take a lot of work to achieve this formless future, but the technology is already here — and the benefits will be enormous.
What is the key to unlocking digital transformation?
The key to unlocking true, comprehensive digital transformation in wealth management (as opposed to one-off digitization projects) is the integration of solutions.
“The firm that can build a one-stop-shop — a system for prospect profiling, risk assessment, new account opening, asset allocation, IPS, security selection, reporting, billing, and analytics all in one — will have a distinct advantage,” says David Ambrico, Docupace’s Vice President of Enterprise Sales.
“Technologies that provide a platform, and not just an application, will enable wealth management firms to take control and bring about immersive digital transformations,” adds Ron Wallis, Docupace’s Chief Technology Officer.
The experts we surveyed also noted to look out for robotic process automation (RPA) as a key driver of transformation. This technology will allow wealth management professionals to focus on relationship management instead of paperwork processing.
Who’s responsible for driving digitization in wealth management?
Put simply, the responsibility for driving digitization in the industry lies with everyone.
“[It] lies with both the leadership of the firm and the advisor,” says Chris Mills. “User-friendly technology needs to be made available to the advisors, and advisors need to be willing to change their habits and adopt the new technology.”
But according to Diane Buckley, Director of Strategic Alliances at Docupace, the wealth management digital experience will only improve if the entire process chain works to improve it, including clearing and custody firms, carriers, and the Federal Government.
Docupace CEO David Knoch agrees. “Technology firms, product manufacturers, and distributors (RIAs, broker-dealers, and advisors) each play a role in defining, creating, implementing, and adopting digital solutions,” he says.
How will digitization affect advisory?
Digitization in wealth management will improve the relationship between advisors and investors. While it does raise questions about the stability of the advisor position, our experts agree that not digitizing is simply not an option.
Wayne Gilpin, Senior Vice President of Global Partnerships at Vestmark, likens it to the way digitization has transformed other industries, like retail.
“Today, almost everything we traditionally think about as being an ‘in-person’ buying experience can be done online,” Gilpin said. “On-demand delivery, like Netflix, has the effect of changing the delivery expectations for all consumers.”
Our experts agree that however advisory changes, it will look very different in the future as a result of digitization.
“Ultimately, everything will be fully integrated for the client and available on their smartphones,” says David Ambrico.
In the meantime, implementing digital wealth management solutions like paperless advisor transition services and account opening will improve work for both advisors and clients.
What will happen to firms that don’t embrace digitization?
Firms that don’t adopt digital wealth management processes will be left behind. As David Knoch puts it, the future is digital, and your firm must be as well.
As demographics and consumer preferences change, the path forward for non-adopters will become increasingly unstable. Digitization will become not just a driver of growth, but a requirement for survival.
In fact, by 2030, our experts believe wet ink signatures, paper forms, phone calls, and faxes may be completely obsolete within the wealth management industry.
