Executives in the wealth management industry have been kept on their toes by several recent shocks, including geopolitical crises, inflation, consumer spending wobbles, volatile financial markets, and a spike in cash deposits due in part to rising interest rates. Beyond the current political and economic headwinds, however, the business is also being altered by innovation and a wave of investment in IT.
As a result of the Covid-19 outbreak and its aftereffects, many industries have seen dramatic changes. Furthermore, businesses must deal with the massive transfer of wealth as baby boomers pass their fortunes on to their children and grandchildren. These new, younger customers expect a fully digital shopping and purchasing experience.
Only a select group of forward-thinking wealth management companies is boldly advancing on their digital transformation journeys, scanning the horizon for openings.
We haven’t seen the business find the right balance in developing the technical skills it needs to compete in this world after a pandemic. Many industry leaders are still analysing their procedures, expanding their teams, and investigating untapped markets. They are doing this while making concerted efforts to tackle challenges brought on by inefficient business procedures all along the value chain.
Businesses can do little but go on. Capgemini’s World Wealth Report 2023 asserts that digital transformation is a decisive factor in the success or failure of wealth management companies.
For the first time in over a decade, their ultra-wealthy clientele has been experiencing reductions, with a 3.6% dip in worldwide wealth in 2022 and a 3.3% drop in population to 21.7mn.
The majority of people are frustrated with their wealth managers. Only half of the wealthy are happy with the variety of contact options their wealth managers provide, including in-person meetings, mobile apps, and websites.
Rich people expect more from companies than they are getting. Clients seeking guidance from financial advisors are increasingly concerned with protecting their money as macroeconomic headwinds increase.
The business world must learn to live with such unpredictability to provide its customers with the value they want in real-time engagement and a customer-centric experience.
The approach in which companies provide their employees will form the foundation of this value addition. So, a financial advisor’s efficiency is the most crucial factor. After talking to numerous industry CEOs, I can confirm that the will to change exists but that more daring action is required to make the transition.
Financial advisors currently waste almost two-thirds of their time on tasks not directly related to serving their clients.
A growing trend in the financial services industry is for companies in the wealth management sector to provide their advisors with cutting-edge digital client-facing tools, access to experts, and automation software. All of these actions are positive developments.
Customers in the millennial demographic expect everything to be digital.
When a customer reaches a certain point in their lives, such as when they are preparing an estate plan, the relationship manager is tasked with mobilising resources and presenting the appropriate expertise, a digital workstation that provides access to all of a wealth management firm’s services in a single location would go a long way towards making this goal a reality.
Clients are also increasingly concerned with sustainability, using their investments to advance environmental, social, and governance (ESG) initiatives. Per their fiduciary obligation to their clients, some companies are constructing ESG data hubs to collect and analyse data to draw actionable conclusions.
These firms will be able to validate expenditures and produce useful intelligence. Forty per cent of financial advisors are asking for more data to better understand the ESG impact, and our survey shows that sixty-three per cent of the ultra-wealthy want trustworthy and transparent ESG scores for their assets. Time and people’s lack of patience will ensure this becomes the industry standard.
Investing in technology and becoming an industry leader in digital transformation is not quick. Businesses may get the most out of their digital transformation initiatives using commercial ecosystems, developing AI and ML technologies, and automating operations across the value chain. If businesses can pull this off, they can modify their business model from one based on transactions to one based on long-term financial ties; this is a surefire way to increase client satisfaction, loyalty, and longevity for wealth management organisations.
