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.