UHNW individuals, who have tended to go for more traditional wealth services, are in danger of missing out on opportunities by ignoring the benefits of digital channels – when used appropriately.

While modern technology is changing retail and mass-affluent banking and the wider financial sector, at the high net worth and “ultra” end of the spectrum, clients still need the “white glove” service. People may like their gadgets and online tools, but the wealthy still want the human touch, even though they still use digital channels to stay in constant touch with advisors. This is an oversimplified observation, maybe, but it appears to contain much truth. 

With that in mind, how can UHNW individuals be encouraged to make more use of digital tools, while keeping the value proposition of service at a high level? To discuss this question is Andrea Seminara, chief executive and chief investment officer, Redhedge Asset Management. The editors are pleased to share these views. The usual disclaimers apply to views of outside contributors. Please contact us you have views and responses. Email tom.burroughes@wealthbriefing.com

It is hardly a secret that ultra-high net worth (UHNW) individuals, with their complex financial needs and higher expectations for personalised service, have tended to favour traditional wealth management offerings. 

They have typically sought to build strong relationships with the people who manage their wealth, believing that regular face-to-face contact strengthens trust and fosters a more favourable service. 

However, things are changing. In the aftermath of the pandemic, which restricted personal contact, and considering rapid developments in technology, there is a growing trend towards digital using platforms to support the needs of UHNW individuals. 

And firms have little choice but to move forward. Capgemini’s World Wealth Report 2023 highlighted that digital transformation is becoming a game changer for wealth managers – it will either make or break their business. 

Market trends are also heaping the pressure on. Their super-rich clients have been hit by significant declines. As the cost of living crisis tightened its grip in 2022, their population fell by 3.3 per cent to 21.7 million. 

Unlocking a host of real-time benefits
With many blaming their wealth managers, now is the time for them to embrace the latest technology. It is clear that the world’s wealthy want much more than many firms offer. As an industry, we need to become better at delivering value to clients in the shape of real-time insights, engagement, and a more customer-centric approach. 

Digital wealth management tools offer UHNW individuals a host of benefits. For a start, they significantly improve convenience and accessibility. The ability to manage and monitor one’s wealth through a mobile device provides an unparalleled advantage, particularly for individuals who are frequently on the move. This eliminates the traditional barriers of time and location, enabling a seamless integration of wealth management into daily life. 

Digital platforms also offer a unique level of aggregation, consolidating various elements of an individual’s financial portfolio. This includes bank accounts, investment holdings, and even collectables such as art and classic cars. By providing a more holistic view of one’s wealth, the latest digital platforms cater more effectively to the complex and multifaceted financial affairs of UHNW individuals. 

Another significant trend in the wealth management sector is the ongoing generational wealth transfer. As Millennials and Gen Zs from UHNW families come into the picture, they have the potential to disrupt the industry due to their higher likelihood of embracing digital solutions. 

These younger generations, who have grown up in a digital era, are more inclined to adopt and leverage technology when it comes to monitoring and managing their wealth. This shift in preferences and behaviours could bring about significant changes in the wealth management landscape. 

Adopting a security-first approach
The adoption of digital wealth management is not without its challenges, of course. The need for sophisticated, customisable tools that can properly handle the intricate needs of UHNW individuals is paramount but concerns over data security and privacy remain at the forefront.  

The asset and wealth management (AWM) sector plays a crucial role in managing the world’s capital and is expected to be worth $145 trillion by 2025. This growing level of wealth is attracting ever more sophisticated cyber criminals. Recently, the industry has been shaken by ransomware operations – for example, DoppelPaymer against a US organisation and Maze against a French organisation. 

Picus Security has also published its latest data set this month, showing that serious ransomware incidents across the financial sector doubled in the first half of 2023 – which it attributes to new ransomware gangs bursting onto the scene in these volatile times. 

The transition from physical to digital documentation of assets – and indeed from physical to digital assets in general – is a key feature that appeals to many UHNW individuals. 

This shift not only greatly improves organisation and accessibility but also enhances security. In today’s interconnected world, where the safety and confidentiality of financial information is critical, the better digital platforms are providing market-leading, robust solutions. The ability to store and access digital documents securely ensures peace of mind and safeguards sensitive financial information. 

If forward-looking wealth managers can find that sought-after sweet spot between innovation and data protection, they will be able to provide a next-generation service for the next wave of wealth.