Easy, quick, navigable digital access and delivery have made the impossible possible. Consumers can easily search, buy or communicate online – anytime, anywhere. So why would we not – how could we not – replicate that essential digital experience across wealth management?

What an interesting time in our industry – so many disruptors vying for our attention and beckoning “change”. While many firms have been focused on core competencies and markets for nearly a decade, further redefinition of business models is warranted given the prevalence and evolution of “all things digital”. Not surprisingly, we’re seeing clear and concurrent trends across financial services:

• Heightened customer expectations are most certainly influencing business priorities.
• Technology as an enabler for delivery, distribution and moving money. When you think of “digital”, while not wholly synonymous by definition, it is difficult to imagine “digital” without the complement of “technology”.
• Focused attention on demographics. Why? Because this area spells “opportunity”.

In addition to these “universal” financial service trends, there are those specific to wealth management. As a solution, digitization in wealth management is vital to fuelling progress, optimizing efficiency, facilitating communication and maximizing growth. If there was any doubt, consider the unprecedented disruption our industry has witnessed in the past few years:

• Regulatory requirements have put significant demands on organizations. At the same time, unpredictability relative to the outcome of regulatory and compliance is an added disruptor. The US Department of Labour (DOL) delayed the implementation of the enforcement mechanisms of its fiduciary duty regulation to 2019. Who would have thought a new ruling for firms to act in the best interests of the investor would cause such disarray. Either way, I think we all understand that a proactive approach is prescribed here and as firms work to comply with each regulation, there are corresponding concerns regarding the management of resources and issues related to governance, legality, risk, security, data, analytics and reporting. This can stress even the most buttoned-up firm.
• Digital self-service is fuelling investor demands and expectations. Digital is allowing firms to offer more to high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients while also making it possible to go downstream to gain business from new segment areas. Robo-advisor start-ups, for instance, have set a new standard for wealth management; from account activation to servicing. Most financial advisors today are not using a digital platform, yet many investors say that human interaction and the complement of a more digital experience is appealing. Digital advice will account for US$400 billion in assets by the end of 2018. Although this represents a fraction of all assets, our industry must prepare for an imminent and growing shift in investor preferences. Other WealthTech newcomers have tapped into industry needs that offer on-demand features, including impressive user interface design, intuitive predictive features that make recommendations, communication, sharing and selection of investment options through social media, and advanced cognitive and analytics solutions. In addition, our industry has been influenced by retail banking, where innovations in the user experience, determination of client preferences and mobile tools have increased consumer engagement, transaction volumes and revenue growth for clients. There’s a reason we’ve seen a proliferation of both FinTech start-ups and acquisitions over the past 12–18 months. Those firms that capitalize on digital innovation will be positioned for a competitive advantage and reap the benefits.
• Customization and personalization is enriching the investor journey. Gathering rich data that identifies customers’ behaviours and needs enables firms to make meaningful recommendations based on investor preferences. This represents yet another door-opener for growth. It is also a critical factor in providing targeted and relevant responsiveness to this next trend.
• Client segmentation is no longer a “nice to know” but a key factor in influencing loyalty. Firms know that to retain current clients and gain new ones, they need to identify, define and understand all viable segments. Grasping the uniqueness and specific drivers of each segment in wealth management is a necessity, because there are several to consider – all asset levels (HNW, UHNW and now low-balance investors, thanks to robo), generational and the emergence of women as investors. This is a topic that warrants deeper and more extensive consideration because, while generational and women stand on their own as segments, they may also fall under the HNW or UHNW classification. In fact, not only are HNW and UHNW growing in numbers, but the wealthy are also becoming even wealthier and they’re also becoming an increasingly diverse segment, across demographics. So as an industry, we had better make it our business to get to know every segment area.

The rise of 92 million millennials and a changing workforce are already profoundly impacting the implications and opportunities. Millennials like to be rewarded and, no surprise here, they’re social media enthusiasts. They also love multi-channel engagement, online shopping and email, but will attend an in-person event if it’s tailored to their interests. To win over this coveted – and elusive – digital native segment, we’ll all need to keep pace and evolve with innovative products and services. Despite opinions to the contrary, it is possible to win their loyalty… and their wallets.

With so much focus on millennials, gen-Xers (born between 1965 and 1980) are often overlooked. At 45 million they are half the population of millennials, however, to ignore them would be a mistake. Gen-Xers really NEED an advisor. They’re great spenders… and consequently have racked up a lot of debt along the way. However, thanks to their baby boomer parents, a transfer of about $30 trillion will occur and many gen-Xers will be on the receiving end of that windfall. They need advice because retirement is on the horizon and, generally speaking, this generation hasn’t done a great job of saving.

The pitch for financial advisors to a gen-Xer can be a motivating one for this generation: the median retirement amount saved by gen-Xers working with a financial planner is US$90,400. That’s twice the amount as saved by those who don’t have an advisor. The reality? Currently, 77% of gen-Xers are not working with an advisor. That’s a big drop from a few years ago, when 63% were consulting with one. Like millennials, do-it-yourself gen-Xers are also inclined towards “self-directed” investing. For this reason, much-needed human advice with access to a robo would be an enticing combo for this generation.

Women are an untapped market for wealth managers, and the industry is just starting to take notice. Marketing to women versus men cannot merely be a “nuanced” approach; it must be a dedicated effort. On average, women take the time to educate themselves before making a decision and that could mean a longer sales cycle. Women typically make decisions based on relationships, brand affinity and trust. It’s also important to understand segments of women investors and the unique drivers and needs of each. Firms that invest in women will yield the ultimate payoff – client loyalty that translates into another opportunity for growth.

The Fiserv Expectations and Experiences Trends survey found that more than one in three consumers without a financial advisor say they are interested in having one, but don’t believe they “qualify”. This includes the majority of millennials and gen-Xers, who value human advice but also want the option of self-directed, “robo” investing. Of those who invest their own money, only one in 10 give themselves an “A” in investing know-how. The perception that there are prohibitive “requirements” to working with a financial advisor can be changed, particularly now, as firms have the ability to extend their offerings and serve low-balance investors with robo solutions who are enabling firms to deliver a great high-value customer experience. And millennials aren’t the only ones inclined towards digital advice; HNW individuals currently use online investing tools more than any other investors.

Yet, in thinking about how much “digital” seems to surround us in our daily lives, it’s head-scratching that industries today are still less than 40% digitized! Research shows that companies who prioritize digital across multiple facets of their business improve their performance, and those industry leaders align their digital and corporate strategies. In financial services, the prevailing mindset is that digital, as an imperative, has some evolving to do. Digital disruption does shake up the status quo and may call for a change in strategy and a shift in the business model; however, the revenue, profits and opportunities are the rewards and gains firms can look forward to when a strong digital strategy is put in place.

Digital technology also addresses and facilitates other pressing wealth management needs, including client onboarding, account servicing, on-demand reporting and accelerated trade settlement, such as T+2 settlement. These and other developments build a compelling case for investment in digitization.

Technology and digital innovation is significantly altering the way we think and do everything. Every industry is experiencing the impact of this change. There was a time when wealth management firms developed offerings and then pushed those products and services out to clients. This paradigm has shifted considerably. Our clients are also consumers, who are now accustomed to on-demand, “at-the-push-of-a-button” products and services. They also have high expectations and clear ideas on the types of wealth management products and services they want, the way in which they want them delivered and how much they are willing to pay.

Digitization fosters progress and it is incumbent upon all of us to deliver solutions and offerings that are meaningful for today’s investor. The virtual advisor office and end-investor experience will continue to evolve, transforming the wealth management experience for all participants. Any interaction in financial services must be easy and echo your customers’ everyday buying experiences. In doing so, firms will reap the benefits of customer loyalty, growth and opportunity.