Wealth managers must work to match clients' appetite for technology

While it may not be comfortable reading for the wealth management industry, it appears advisers are only getting things ‘half right’ when it comes to delivering appropriate technologies for clients.

The most recent Futurewealth research shows that just 49 per cent of the world’s wealthy feel the investment technologies of their financial providers are up to scratch. Most specifically, they feel let down in the ‘discovery phase’, with only 40 per cent of the Futurewealthy agreeing  provider technologies are adequate when it comes to showing them how to invest their money.   

Whether you look at the cup and see it half full or half empty, the wealth management industry is at a technology tipping point; firms need to upgrade or risk losing clients.

These results are drawn from our latest Futurewealth report, published last month in partnership with SEI and Standard Chartered Private Bank. The report, entitled Helpful Investment Technologies, is based on insight from 3,477 global high net worth individuals (HNWs) worth an average of $1.9m (€1.5m).

The research finds clients worth more than $4m slightly better catered for, but even among this elite group only 59 per cent are satisfied with their wealth manager’s technology. Meanwhile, only 45 per cent of those worth under $500,000 agree their providers are really delivering the technology they need.     

So what exactly is it clients are looking for when it comes to provider technology? Safety and practicality are, of course, paramount, but clients are also looking for solutions that are more intelligent, innovative and high quality.

Until now, wealth managers have held the digital world at arm’s length. But, while the industry buffers, wealthy clients appear to be streaming seamlessly ahead. In fact, digital channels have become central to the adviser selection process. When deciding to work with a financial provider, online ratings and reviews, search engines and price comparison sites are all evident in the decision-making matrix of the global HNW.

It is the most highly-valued clients who lead this trend. In fact, those worth over $4m place three times more emphasis on a firm’s blog posts and social media presence when deciding which adviser to work with than those with under $500,000.

Moreover, clients have already started to create a technology-enabled relationship with their wealth management provider. When it comes to communicating with their wealth managers, they have a treasure trove of devices.

Laptops are the most widely used communication device but smartphones, iPads and Blackberries play a significant supporting role, with well over 40 per cent of respondents ascribing importance to these devices to maintain their financial relationship.

The greatest demand for portable solutions comes from the wealthiest of the group. Seventy-four per cent of those worth more than $4m already use mobile and tablet applications offered by their wealth managers, versus just 35 per cent of those with current wealth of under $500,000.

The results point to the simple fact that wealth management investment technology needs to move away from the purely mechanical and start to become more tech-savvy, empowering clients to learn with their wealth adviser and to understand their investment choices far better. Before this happens, firms will need to accept that technology does not take away from their personal relationships; rather it empowers them.    

Annie Catchpole is senior associate at wealth management think-tank Scorpio Partnership