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Industry Spotlight > Women in Wealth

How to Target Affluent Clients Online

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Mass-market and mass-affluent investors are similarly inclined to use digital investment tools, but a report by Deloitte found that they have different desires about how and when to interact with wealth managers online.

“As digital channels mature and new digital-first and digital-only entrants make their names in the marketplace, traditional advisors with strong brand names run the risk of being left behind,” Deloitte wrote. “This is an easy trap to fall into, but an easier one to avoid.”

The industry tends to make some assumptions about who uses digital investing tools: that users are younger and less wealthy. The paper found some truth to that, but focusing only on that segment ignores wealthier, older investors’ wishes.

“Broadly speaking, clients are more likely to seek less in-person financial advisor engagement throughout the early stages of their life,” according to the paper. Those kinds of clients can be effectively served by digital channels, with in-person interactions “as needed to aid more emotional investment needs.”

Although some segments are better targets than others for digital tools, “one thing is abundantly clear: All clients, regardless of age or net wealth/income, want enhanced digital capabilities.”

Mass-affluent investors, those with over $250,000 in liquid net worth but less than $1 million, are primarily looking for tools that can help them enroll in new products, execute trades and track their investments’ performance.

More affluent investors prefer a “high-touch engagement model” with their advisors, the report found, and are least ready to adopt digital investing tools, although they were more likely to say digital tracking tools were useful.

The mass-market segment is the most ready for digital engagement, according to the paper. They have the lowest need for control, and are less interested in making complex decisions about their finances.

Deloitte surveyed 2,700 retail investors for the paper, “Retooling Wealth Management for the Digital Age.”

Market segmentation by traditional metrics, like age and income, is valuable, but doesn’t create a full picture of digital users. Deloitte broke down likely digital investors into six groups.

Millennials have about $1.4 trillion of investable assets, according to Deloitte. Although they are probably most advisors’ idea of the typical digital user, they can be seen as two distinct groups.

“Newcomers,” as the paper dubbed them, are tech-savvy and feel less entitled to “white-glove and in-person service.” This group of approximately 18.5 million households has a household income of less than $75,000 and “can be served in a nearly-entirely digital manner,” according to the paper.

“Highly interactive mobile applications and digital platforms are a must, and over 65% want the ability to review/adjust their portfolios themselves, digitally and 24/7,” Deloitte wrote.

The “up and comers” segment of the millennial demographic “want to take ownership of their financial lives,” the paper wrote. They believe they should have access to the same financial opportunities as wealthier clients, and once committed to a wealth manager will “demand a combination approach between high-touch interactions and digital.”

The largest segment identified in the paper is the “modestly plateauing” subgroup of Gen X clients. Accounting for about 36 million households, and with a net worth of less than $250,000, these clients are less confident about their financial skills and highly emotional. As such, human interaction is important to these clients. Although two-thirds want some digital interaction, just 28% said they want their primary method of contact to be online.

“They want to feel enabled to access their account themselves, but secure that someone will keep them from making the wrong decision,” Deloitte wrote.

Wealthier Gen X investors (those that fit in the $250,000 to $1 million mass-affluent range) are more confident and want personalized service combined with digital tools. Over half would consider a fully automated digital provider to manage their wealth, the report found.

Lower income baby boomers are less likely to trust the financial services industry because they haven’t been very successful in it, the report noted. That could create an interest in digital tools, but as a group, they’re unfamiliar with high-tech tools and indicated the lowest demand for them. Just over a third want to be able to adjust their own portfolios online.

Mass-affluent boomers have transitioned their financial goals to focus on preserving wealth for heirs, the report found, and consequently have an emotional attachment to money. That makes them more interested in human interaction than digital, but 58% still indicated they would like to be able to interact with their wealth manager online if they wanted to.

— Read How Robo Technology Will Take Independent Advice to the Next Level on ThinkAdvisor.