February 28, 2013

Newly Affluent Unimpressed With Advisors’ Use of Tech and Investment Strategy

Study finds wealth managers’ technological capabilities lag in delivering investment insights

A large portion of up-and-coming affluent people around the world, though generally satisfied with their wealth managers’ use of technology, are unimpressed with the way advisors use that technology to show them how to invest their money, according to a new study.

Only 40% of respondents in the third of the four-part Futurewealth Report series expressed satisfaction with the technology wealth managers used to demonstrate portfolio strategies, with 59% saying they were satisfied when the technology was used to execute financial transactions.

Satisfaction was highest in the Americas, where levels were 10% and 9% higher than the above-mentioned global figures, respectively, according to the study by SEI, Scorpio Partnership and Standard Chartered Private Bank, which surveyed 3,477 respondents globally with an average $1.9 million in net worth.

Regardless of region, the results illustrate that investment technology must transition from mechanical capabilities to a state where investors can digitally access their advisors’ opinions on current trends, industry developments and recommendations, the report said.

Advisors have integrated technology in the middle and back office, where enhancements have simplified the ease of transactions and minimized operational overhead, Joseph Ujobai, executive vice president of SEI, said in a statement.

Now investors want to experience these technology advancements themselves, “and wealth managers need to prioritize giving investors digital access to the decision-making processes that inform managers’ suggested strategies,” Ujobai said. “Wealth managers who use digital technology to pull investors into this discovery phase will stand out among competitors.”

With regard to client acquisition, the report found that the emerging wealthy checked wealth managers’ credentials and investment recommendations through various digital filters before making decisions.

Although 62% said “previous personal experience with the firm” most influenced their decision to work with a particular financial provider, the Futurewealthy double- and triple-checked information digitally.

Fifty percent said tools such as “ratings and reviews of firm’s products and services” were most important, followed by “firm’s website” (47%), “news articles about firm and products” (46%) and “price comparison sites” (44%).

Interestingly, respondents ranked a firm’s social networking presence and blog posts as the least important factors when evaluating a financial provider. So much for the social media craze.

Each report in the Futurewealth Report series focuses on a different aspect of how technology and digital communications can be used to engage the next generation of wealthy.

Part one revealed the digital habits and views on technology of individuals rapidly accumulating considerable wealth who have positioned themselves at the forefront of the digital information age.

Part two found that the up-and-coming wealthy are not just effective communicators; they have also devoted the time and mastered the skills to make their voices heard.

The final report in the series is scheduled for release in the second quarter.

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