The wealth management industry is undergoing a noteworthy digital transformation, but it is a two-sided coin. As the COVID-19 pandemic accelerates the importance of utilising technology for traditional players, it has also shown that a hybrid model is a must-have for digital entrants.
Yes, the wealth space is embracing technology at a faster rate than in the pre-COVID-19 era, but learnings from robo-advice show that human advice remains necessary. When financial markets are volatile, investors demand more communication with a human adviser for reassurance, revaluation of their investment strategy, and experienced advice. So as robo-advice goes through its first big test of weathering a market storm, investors will prefer a human to discuss their portfolio with. The coronavirus crash will therefore cement the need for having a human option on a robo-advice platform. Current robo-advisers or new entrants who do not offer this feature should be prepared to risk losing out to hybrid competitors after COVID-19.
On the other hand, for traditional wealth managers, the COVID-19 pandemic will have forced advisers to work from home and engage with their clients through video chats, chat apps, and email or phone calls – mediums that were rarely used outside of the private wealth management tiers prior to the restrictive circumstance the world is in.
However, it will now likely become the norm as retail investors get accustomed to new ways of interacting with their adviser. Our 2020 Banking and Payments Survey aptly demonstrates that clients of all generations are demanding a multi-channel experience too. Therefore, it will be vital that traditional players build on the new experience they’ve been forced to provide their customers with.
Unsurprisingly, 51% of millennials now prefer using online or mobile channels when arranging their investments. But it should also be noted that the older generation, too, embrace digital channels. Providers should keep note that different generations will have different proficiencies in using technology, so customising this to be easily digestible for the customer will be key. This will also aid in differentiating between competition as in future years, customers will be opting for players based on how good their multi-channel experience is for them, as opposed to whether they have one or not.
An individualised experience is being yearned for across financial services. Providing a multi-channel experience is one avenue to reaching the personalisation clients desire. Investors want their wealth to be managed around their day-to-day lives, and providing a wide range of options to manage their portfolio will be key. Those players who do not adapt to this demand will risk losing out to competitors who can provide a high-tech, high-touch service.