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Technology > Marketing Technology

Wealth Managers Must Be High-Tech and High-Touch

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Following the financial crisis, most — if not all — advisory firms were focused on getting back to profitability and so set their sights on high-net-worth clients, leaving a void in the mass affluent market that technology startups — robo-advisors — were able to fill, according to a report published in March by Aite and Scivantage.

However, some HNW clients like what those tech providers have to offer, too. The report, “The Race to Easy: Reevaluating the Wealth Management Technology Strategy,” found 30% of assets managed by online wealth manager Personal Capital are from HNW investors.

Millennials and Gen X are the most likely targets of advisory firms’ digital efforts. They’re also more likely to use multiple channels for financial advice, including self-help books and websites like Motley Fool or They were more likely to call financial TV shows helpful, but the report found boomers also find these shows helpful (40% versus 26%).

Among consumers who already work with an advisor, Gen X and Y investors were more likely than boomers to list better technology among their top three unmet financial needs. However, the report noted that boomers typically have more complex financial situations than younger investors. Their top unmet need was more structure in their financial lives. Firms might get more out of the tech tools they create to appeal to younger investors by also making them user-friendly to appeal to boomers.

Sophie Schmitt, a senior analyst at Aite Group, urged advisors to evaluate how they can supplement their services with digital offerings to attract younger clients with growing assets, but also to retain older, wealthier clients who have grown used to certain level of access to their online accounts.

“The emergence of Gen X and Gen Y investors requires firms to launch new service models that blend high-tech and advisor service,” Schmitt said in a statement. “Evaluating how digital technologies complement and enable existing advisor services should be a priority for firms to ensure they remain competitive over the long term while they continue to meet the needs of existing clients who now expect self-service tools and digital access to their wealth management information.”

Robust technological tools are important for firms that want to compete with robo-advisors, but the report noted that “clients come to a wealth management firm for financial advice first and supporting technology second.” Ultimately, the client-facing tools advisors offer are only part of their services, not a replacement for wealth management.

“The competitive wealth management firm of the future will have figured out how to combine high-tech with high-touch service to deliver an optimal offer at the right price point to the right client segment while meeting the firm’s profitability goals,” according to the report.

The report stressed that it’s important for advisors to buy into the digital tools they offer their clients, even self-service tools, because “most investors do not have the discipline to manage their finances on their own using online tools; they need their advisors’ encouragement and coaching.” For example, Aite found that less than a third of Gen X and Gen Y investors use online financial management tools, and suggests utilization will remain low without motivation from an advisor. Firms need to determine what kinds of tools their clients want and how they fit into their own goals.

The report gave some examples of the kind of technology firms are investing in today:

  • Client portals that aggregate financial information and offer ways to share information and interact with the advisor
  • “Cobrowsing technology” that supports phone and video conversations seamlessly
  • Video conferencing
  • IP phones that allow advisors to receive calls on any device

Furthermore, clients expect more frequent contact than annual reviews, according to the report. Technology can help advisors meet clients’ demands for account information as it becomes available. The report urged advisors to evaluate their planning application providers for monitoring and alert capabilities. “With access to financial plan information and planning capabilities, clients will feel empowered to explore financial decisions on their own at any time but under the guidance of the advisor and wealth management firm.”

That also gives advisors the ability to see what their clients are looking at and prepare for meetings so they can focus on what clients are most concerned or interested in.

— Check out Robo-Advisor Offers Your Clients a Free Second Opinion on ThinkAdvisor.


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