Wealth management must adapt to the Web 2.0 era

“What century are you living in?” was one provocative question posed to a rather shocked, and by all indications tech-savvy, audience at a recent luxury conference held in London. Yet, many in the audience were forced to ask themselves that very same question after being educated by a technology future watcher on the myriad number of ways that Web 2.0 technology is being utilised by retail brands in a social networking context to access, win and retain clients.

That technology and the end-clients’ increased usage of social networking platforms is changing the face of business and how it interacts with clients, both existing and potential, is not news. However, despite this, the wealth management industry has been slow to embrace technology as enthusiastically as its closest retail peer, the luxury industry. Luxury goods manufacturers are, in essence, competing for share of wallet in the same segment as wealth managers, the mass affluent and high net worth individual market, and as in the wealth space, competition is increasingly fierce.

This parallel allows us to explore if some of the online and mobile technology used to build mass market retail and luxury brands, engage their audiences, and ultimately attract and retain clients, could be utilised in wealth. Apps are one thing, but peer sectors have moved far in advance.

Key to many of the strategies being developed is to engage with clients who are using the internet and social networking sites as their first port of call when considering a retail or luxury brand purchase. Here brands have started to use varying but interactive technologies such as Clikthrough and Me_tail, both specifically designed to increase customer engagement by turning the web browsing experience into an interactive and customer-centric experience.

Clikthrough’s interactive video technology allows clients to click on what they see and immediately access information on the product – who manufactures it, where customers can buy it and how much it costs. Me_tail is a service designed to answer the question of “Will this look good on me?” A consumer goes onto the site, chooses a model, tailors that model’s size to their own measurements and then goes shopping with that profile and immediately sees how the clothing items will fit them.

We can then look at the technology applied by KLM in its KLM Surprise initiative. This allows the firm to target signed-up customers with a surprise that fits their social networking profile. KLM’s team, once the customer is checked-in to a flight, searches their social networking presence to come up with a “surprise”, delivered in the departure lounge that matches that profile.

But how would the concepts underpinning these technologies be utilised in private wealth management? To date most financial websites have been very static. While many wealth managers now offer “case studies” there still exists a large disconnect between the example and most real world experiences. Wealth managers could therefore benefit from watching some of the developing themes in the wider retail and luxury world and bringing those portable features over to their own interactive client acquisition and engagement strategies.

For instance, tools to allow a prospective client to tailor their situation and experience, eg late thirties, entrepreneur, substantial capital tied into a business, hoping to exit through the sale of the business in five years. A web-based tool, or iPad app, can move the market in this direction without too much heavy lifting, but giving clients a concrete interactive example of how a wealth manager can assist them means part of the battle is won already.

Innovations, such as this hypothetical one, will however challenge the wealth management sector and its ways of doing business. What is important is the methods by which the customer of now and the future is engaging to make buying decisions. Building an app will only get the sector so far.

-- Stephen Wall is a director at wealth management strategy think-tank Scorpio Partnership