In its simplest form, the hybrid approach combines the best components of human-based financial advice and digital advice, offering a flexible and tailored wealth management solution to clients of all demographics.

The hybrid advice solution is underpinned by a flexible business model that can support customers throughout their financial lives, from mass market to ultra-high net worth. The hybrid approach, as shown in Figure 1, has three models to offer customers, depending on their customer segment (defined by investable assets) and the complexity of their financial needs.

The level of human interaction, product complexity, fees and accounts offered change between business models. The business models shown in Figure 2 indicate the optionality of the solution and illustrate the flexibility of the hybrid approach to meet the needs of all customer segments and financial needs.

The hybrid model has many inherent benefits to the financial advisor, the business and the client that make it an attractive and mutually beneficial proposition.

The greatest benefit of the hybrid approach is that it increases scalability to the financial advisor, allowing the advisor to attract and serve more clients while maintaining high-quality service. This is mainly because the implementation of a digital platform helps automate manual and time-consuming processes for the client and financial advisor.

Digital advice firms are not held back by complex legacy systems; as such, digital advice firms have focused their platform functionality on addressing important problems facing traditional wealth management. Client onboarding, performance reporting and client profiling have been optimized and digitized, and in the main are provided as out-of-the-box solutions by digital advice platforms. In addition, services such as portfolio construction, rebalancing and tax harvesting can all be automated. Digital services increase advisor efficiency and improve client experience through the customization and collaboration inherent in the hybrid approach.

The digital platform also acts as a catalyst for driving business growth through acquisition of new customers and, subsequently, new assets. A digital offering provides a low-cost feeder channel to attract millennial customers, who have huge earning potential over time.

The hybrid model enables advisors to attract new assets from new and existing customers and, equally as important, it allows the advisor to retain assets currently managed. This is because of a fundamental principal of the hybrid approach’s flexible business model: allowing advisors to service customers independent of their demographic and available assets, and throughout their financial lives (see Figure 3). As a client accumulates more wealth, and their financial needs become more complex, the hybrid model allows advisors to efficiently transition clients from a digital-only experience to one with more human interaction and enhanced services.

As advisors realize efficiencies of scale, implementing a digital platform provides the parent business with enhanced transparency and control across the value chain. Supervisory regulation within financial services requires firms to ensure products and services meet the needs of their clients. Digital platforms provide automated guidelines to enhance monitoring, supervision and risk scoring.

Providing a solution that appeals to, attracts and helps retain clients ultimately drives change and validates business transformation. The transition to a hybrid approach provides immediate benefit to the end customer.

The hybrid approach provides a unified platform accessible by the financial advisor and the client, providing a consistent experience. In addition, the hybrid approach enables channel flexibility across desktop, mobile and tablet. Furthermore, solutions that use cloud-based technologies allow customers to seamlessly move between platforms with no impact to the user experience. In the future, this platform unification will provide the client with a holistic view of their wealth, across multiple providers and products.

The hybrid approach’s most material benefit to clients is that they can choose the level of human and digital interaction. The solution provides flexibility, allowing the client to choose their level of advice, product access, fee structure and digital experience. Hybrid enables a personalized solution that is cost-efficient to the business and provides material growth opportunities for the financial advisor.

The Future is Now for Digital Advice

Independent of the form, digital advice and technology are the future of wealth management. Providing a digital experience has become mandatory. Customer and financial advisors expect better digital tools and the flexibility of human interaction to suit their specific needs.

Embracing the FinTech ecosystem and using digital advice platforms to provide a hybrid approach empowers wealth management firms to evolve their business, attract a new generation of customers and serve them in a flexible and cost-effective way.

Moving to a hybrid approach also helps firms future-proof against further changes to the wealth management model, providing greater agility to meet the ever-changing regulatory and customer environment.

Although the future is bright for wealth managers who successfully complete this shift, pressure remains for continued innovation, as non-financial service companies such as Uber, Alibaba and Facebook recognize the opportunity at hand, start offering their own form of financial services and begin a new battle.