“The electric light did not come from the continuous improvement of candles.” – Oren Harari
Likewise, the next innovation in the financial services industry won’t come from improving how things are done on pen and paper. Shifting customer expectations have created a need for digital acumen in the wealth management space as never before.
In this blog, we break down how changing client expectations, advisor effectiveness, and the data all support moving to digital solutions today.
Clients Want an Increasingly Digital Experience
When wealth transfers from one generation to the next, historical data shows that 90% of heirs change their financial advisor. Why does this matter? Between now and 2060, Deloitte estimates that $50 trillion will move from one adult population to another, the largest wealth transfer in history.
Will your firm be part of the 10% who keep their advisor during the hand-off? It all comes down to client expectations. How well is your firm managing increasing client expectations, such as:
- A fast and interactive user interface on desktop and mobile for website/app/customer portals
- Personally relevant information shared in the method I consume information (social media, email, apps, etc.)
- User-friendly support when I have questions
- On top of trends and offers cutting-edge services
- Provides timely responses to questions and concerns
The fact is, clients don’t care about a firm’s internal obstacles that come in the way of providing those things — they expect to have a great digital experience with their financial advisor just as they expect a great digital experience from Apple, Netflix or Amazon.
“The younger generation wants to be with a firm they view as a technological leader, even if its services aren’t materially different,” according to Matthew Peterson, senior vice president and chief wealth strategist at LPL Financial. “They like the wow factor of having an ‘enhanced digital experience.’”
Digital solutions help wealth management firms stay ahead of these changing expectations and become sources of trust and knowledge. For example, one survey found that 92% of investors have used the investor relations portion of a company’s website to investigate an issue, and 72% have made an investment decision based on what they learned there.
More and more, customers want to come straight to wealth management firms for answers to all their questions. Indeed, the same survey found that users trust firms’ websites more than Google, LinkedIn, YouTube, Twitter, podcasts and traditional news sources.
Being present on digital platforms and excelling on them is the best way to keep up with these changing expectations.
Digitally-Enabled Advisors Are More Effective (& Happy)
It’s no secret that the post-pandemic world is increasingly hybrid — 73% of institutional investors said they had to work in a different location during the pandemic. As a result, financial advisors have become reliant on digital tools to connect and collaborate at work, both between clients and with coworkers.
This presents both a challenge and an opportunity: How can advisors become more digitally savvy while also dealing with the increasing complexities of the industry? After all, increasing regulations, complicated legacy structures, cumbersome administrative tasks, and disconnected workflows all affect an advisor’s ability to reach their full potential.
According to Deloitte research, two factors are needed to help advisors succeed with clients in this new normal:
- A direct focus on client needs.
- Digitally enabled interaction channels for both clients and advisors.
If their firms can support them, adopting digital solutions for both clients and internal operations can make a huge difference in productivity, profitability and success for each advisor. Advisors can again re-focus on client needs as they are freed from daily tasks through automation and digital adoption.
“The support of technology… frees up an advisor’s time to focus on the areas where the advisor really adds value,” says Erik Steffen, head of IS&P digital wealth solutions at Credit Suisse.
Investing in Digital Solutions Pays Off
Perhaps the most important case for digitization is the financial one. Firms with advanced technology adoption generate 39% of their revenue through digital channels, and expect that portion to hit 59% by 2022.
Meanwhile, firms who wait to go digital can miss out on anything between $80 million to $1 billion in revenue — and that’s not even adding in the qualitative costs of losing relevance to the next generation of investors.
Again, firms who use technology for their client experience expect significantly better revenue prospects in 2022 compared to less technologically advanced firms. This should come as no surprise given that client-centric companies are 60% more profitable than other companies.
In summary? Digitization is the new normal for wealth management. Investors expect an increasingly digital experience, advisors are relying more and more on tools to help them do their jobs efficiently, and the data is growing in support of digitization when it comes to revenue and profit.
Now is the time to decide: Will your firm jump ahead, catch up, or fall behind in the race to adopt digital practices in both services offered and enabling backend systems? Docupace has 20 years of experience in helping wealth management companies make the shift. Learn more about our solutions and offerings here.
