When it comes to mobile apps, the wealth management industry has some catching up to do, according to J.D. Power.
The research group — which plans to release a detailed study on how satisfied investors are with mobile apps of firms like Ameriprise Financial, Merrill Lynch, TD Ameritrade and others in November — says wealth managers have fallen behind industries like hotels, utilities and health insurers (on a 1-to-1,000 scale).
“The wealth management industry has been a laggard with respect to developing a truly robust mobile client experience,” said Michael Foy, senior director of wealth management for J.D. Power.
That’s the bad news.
The good news, Foy explains, is that there is “a consensus … that what exists today is not good enough, and they need to do better.”
The J.D. Power preliminary report on wealth management mobile apps, released Monday, “is part of a wake-up call … that this area needs to be a priority,” he added.
The firm’s research aims to move the industry in the right direction “of how to improve the customer experience, by both sharing data on user experience … and sharing best practices that other industries that are a bit further along in the process are taking.”
High-net-worth customers are “significantly less satisfied” with their wealth mobile apps than other client segments, according to J.D. Power.
More than half (55%) believe information sharing on their mobile app is “very secure.” But 45% give their app a failing grade.
A common critique from clients is that the apps have too much text, too few visuals and lack a fresh look. Top-performing bank and credit card apps have frequent updates and rely on clear, user-friendly design, the research firm says.
“Wealth management firms have set a high bar for the overall customer experience, and it is critical that their mobile apps keep pace,” Foy said.
“Relative to other industries, wealth management has been and will continue to be much more oriented to individual advisors, and their relationships are at the center of the client experience — in contrast with retail banking,” he explained.
This has meant that the industry has had less of an incentive to push its mobile apps forward than in different fields, such as auto insurance.
“There’s really an opportunity to create a much better client experience but also to save significant costs by moving much of the transactions from the branch or office, where there’s a human interface” to an app, according to Foy.
Other factors that have been holding wealth managers’ development and deployment of mobile apps back, he says, include client demographics, since the advisors’ wealthier clients tend to be older and perhaps less digitally oriented.
Regulation has been another constraint. This barrier, however, has been shrinking rapidly. “There’s lots that can be done for clients,” Foy explained.
Of course, it does require a financial commitment on behalf of wealth management firms.
“Clearly, the level of investment in wealth management around mobile is not nearly as large as it is in some other industries …,” he said. “But the cost for good mobile app support — relative to overall spend on marketing and client experience — is really not that huge.”
Some wealth managers “recognize they need to up their game and do more here,” Foy explained. “Customers are doing more on their mobile device in all aspects of life and expect to do certain things with their wealth management and financial service providers as well.”
— Related on ThinkAdvisor: