The air is thick with talk of "digital", but just how far has wealth management as an industry come in its use of modern technology?

The following commentary on how digital technology is – or possibly is not – affecting wealth management comes from John Wise. He is the co-founder, chief executive and chairman of InvestCloud, a fintech company operating in the US and London. This publication is pleased to share these views; it invites responses from readers. They can email the editor at tom.burroughes@wealthbriefing.com.

The move towards the use of digital channels within wealth management can no longer be denied. Studies, reports and managers’ day-to-day experiences all confirm the reality of this trend.

Our daily lives are now driven by digital. This has changed the rules of engagement, with immediate, simple and rewarding applications becoming the norm, and face-to-face becoming less prevalent. 

Clients have raised their expectations as a result. The days of paper-based, quarterly reporting are now obsolete. Instead, clients assume that digital communications are the new normal.

Providing an effective digital experience is now key to retaining and obtaining clients. True digitalisation starts with the upheaval of traditional communications, and goes on to radically transform the core practices and the fundamental processes of wealth management. But in order to take the first steps to true digitalisation, every wealth management organisation needs to first understand its own level of digital maturity. 

Digital gratification
Applications such as Uber, Amazon and Airbnb are popular because they are simple. Everything you need is in one place, and it is easy to use. You can order a ride, knowing when and where it will pick you up and how much it will cost in advance. The technology does all the hard work and gives the user instant gratification.

The latest generation of consumers are now hard-wired to this approach and assume it is normal. In order to remain relevant, wealth managers need to adapt to the digital environment.

Wealth management is not simple. There are many intricacies to what advisers do, and it is dependent on expertise, not form filling. But the processes around it should be simple for both the client and the advisor.

Take reporting. If done manually, it’s a task that is repetitive, takes a lot of time to complete and has to be delivered in a limited time period, which makes it inflexible. It’s hardly the best use of an advisor’s time. 

Through digitalisation, the whole reporting process is automated and instant, allowing a client to get the information they want when and how they need it. Along with the client benefits, the advisor is freed up to take on more worthwhile tasks.

Digital advice (aka “robo-advice”) is another form of automated communication that is key to completing the digital puzzle. Already in use by many organisations outside of the industry - think customer service tools on many websites - this helps to free up an advisor from answering basic enquiries. Importantly, it does this at the client’s behest, ensuring they get the right information at the right time.

These are just two examples of how digital can directly benefit an organisation’s processes. Digitalisation can be easy if the organisation understands where it is on the journey and takes disciplined steps to continue along this path.
 

Effective communication
The first port-of-call when evaluating digitalisation is to look at the existing digital presence. The website should be closely examined to ensure it meets requirements. Does it clearly communicate the business’s core message? Can new visitors get all the information they need from it? Is there a secure client platform for investors?

As we all know, first impressions are key. So it is vital that the website is usable, contains engaging content and works as a gateway to services.

Positioning your brand is another key aspect to this. Many wealth managers neglect brand placement, but it is one of the first key differentiators a prospective client will see. Managers need to ensure their brand is more than a logo, instead using it as a way to communicate what the organisation is, what it stands for. The brand should be embraced across all digital platforms.

The wealthy are mobile - neither time zone nor time of day restricts them. Your digital channels must fall in line and always be accessible. Whenever and wherever your clients need to check in, they should be able to do so via any device and through responsive digital channels, including mobile-optimised websites and native mobile apps.

This digital engagement should include customised mobile apps presenting relevant content, data and documents, designed to deliver modular, dynamic information. Offering real-time market data and portfolio information is also critical for the holistic digital experience. 

A diverse, interactive, digital communication platform that is always on drives clients to engage through digital channels five times more frequently than via phone, and twelve times more frequently than face-to-face meetings. The benefits are obvious.

Informing and educating
A key aspect of every wealth advisor’s role is to identify and explain potential new investment solutions, asset classes and/or instruments. If these are new or unknown to the client, especially in the case of new clients, then explanation or education is required. This need varies across the generations, and between the creators and the inheritors of wealth - but all clients need to understand the nuances of services, products and plans. This allows them to take better informed decisions based on better information.

Digital advice goes some distance in helping to achieve this, providing simple questions for the user to respond to in order to leverage the portfolio construction and risk parameterisation of the advisor while empowering investors with self-service freedom. This also helps to demonstrate value to the client, as well as showcase the organisation’s expertise. This can be boosted by investing in relevant content, such as news, portfolio insights, white papers, FAQs and training videos.

Digital platforms can also track each interaction and client journey, ensuring an audit trail is retained to evidence the advice given and the wider educational content offered alongside recommendations. With the focus in many countries upon the fiduciary role of advisors, this can help prove the requirement was fulfilled.

Holistic, goal-based planning is a new focus in wealth management. The optimum outcome is for your digital channels to empower clients to take control of achieving their life goals through the plans and advisory value you as the advisor provide.

Digitalisation gives power to the client, helping them keep to their goals and ensure they are warned if they come off-track. This process needs to be as simple as possible - preferably running at the same speed as social media. New digital channels will need to consolidate a view across diverse asset types, including an increasing variety of alternative investments, such as real estate, infrastructure and hedge funds.

Question everything
Digital is inevitable if wealth management is to be successful in the future. But it is not an easy objective to obtain if you’re not using the right technology platform. In order to reach a successful outcome, advisors should take stock of where they are, understand what drives their clients’ happiness and partner with the right technology firm that can provide leverage to the advisor as an enabler. 

The most important aspect to consider at each stage of your digital transformation is whether it puts your client first. Only then will wealth managers be able to unlock the benefits digital brings.