Chapter 1
Keeping pace with digital change
As clients embrace new digital channels, first-generation digital channels are getting pushed to the side.
Digital technology is evolving faster than wealth management companies – and even their clients – can anticipate. A comparison of results from our most recent global research study of wealth management clients and our 2016 survey (pdf) highlights how challenging it is for wealth managers to accurately predict future changes.
For example, in 2016, clients vastly underestimated how quickly their preference for mobile applications would grow over other methods of engagement. In that year, on average, 18% of clients preferred mobile apps across wealth management activities and 24% projected to prefer apps in two to three years. However, the actual preference today is over double that projection: mobile apps are now the channel that 41% of clients currently prefer to use for engaging with wealth management firms, followed by websites, face-to-face interactions and phone calls.
Preference for advanced digital channels is exceeding projections from our last survey
Furthermore, clients are now preferring apps for a wider variety of wealth management activities. Nearly two-thirds prefer apps for executing transactions, while just over half prefer them for other basic tasks, such as monitoring and analyzing results and opening accounts. They are also starting to prefer apps for more advanced activities, such as portfolio rebalancing and receiving financial advice.
With clients gravitating toward mobile, the preference for first-generation digital channels such as websites has steadily declined since 2016, contrary to what clients had predicted. At the time, 38% of clients preferred websites as a primary channel across wealth management activities, with the same percentage believing they would prefer them in the future. Less than three years later, websites as a primary channel have declined dramatically – by about a third.
Chapter 2
Leading the next digital wave
Digital and voice-enabled assistants represent the next digital wave – clients prefer them more for financial advice than transactions.
With many mobile technologies now commonplace, wealth management providers looking to differentiate must move quickly to capitalize on the next wave of client engagement: digital and voice-enabled assistants.
These assistants, commonly known as chatbots, can offer a more personalized and user-friendly experience than mobile apps. With their use of natural language processing and ever-advancing machine learning capabilities, chatbots can answer questions, monitor transactions, place orders, perform screening functions and link clients to advisors. They can also support advisors in becoming more efficient in their daily activities, enabling them to spend more time with their clients.
Digital assistants and chatbots are emerging as a preferred method of interaction
While only 1.4% of clients prefer to use digital and voice-enabled assistants as a primary channel today, 9% of clients say they would prefer this channel in the near future. This trajectory indicates a considerable swing in momentum – but these numbers may be significantly underestimating growth potential, just as mobile app growth potential was underestimated in 2016.
Most interestingly, the future demand for these technologies is not restricted to basic, repeatable activities. Our research shows that the preference for chatbots is greatest when seeking financial advice (18%) and learning about products and services (11%), as opposed to making transactions (2.5%).
These preferences increase with the level of investable assets, countering a common perception that automated, low-cost services should be reserved for the mass market and mass affluent segments only. Our research showed no discernable difference by age, indicating an openness across generations to these new technologies.
Given these trends, incumbent wealth managers must take a fresh look at how they will interact with clients in the coming years – from conference rooms to living rooms. As firms prioritize their digital investments among multiple channels such as mobile, website and voice, they need to pay close attention to where clients will be in the next few years. This may mean reallocating budgets from websites to voice-enabled tools sooner rather than later.
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Chapter 3
Blending high-tech with “high-touch”
Despite their propensity for all things digital, many clients do not want to lose the human touch.
Despite rapid demand for digital engagement, wealth managers must continue to balance building scalable, automated solutions with human interactions for those clients that desire the human touch.
Mobile apps remain the preferred method of interaction in the future for key activities
One-quarter of clients currently prefer face-to-face interactions or phone calls as their primary method of engagement; even more clients do so for receiving financial advice (42%). High-touch engagement is especially desired during periods of significant market turmoil, when clients are looking for a trustworthy advisor to soothe nerves.
The demand for human interaction is steeper for some types of clients – particularly those with more complex financial situations or conservative risk attitudes. Risk-averse clients show a much stronger preference for face-to-face communication than those who are more risk-tolerant (23% versus 7%). Meanwhile, the desire for face-to-face interactions decreases with wealth level: mass affluent clients prefer them at almost double the rate of ultra-high net worth clients (11.7% versus 6.5%).
To enable high-touch service, firms must harness technology to improve the productivity and quality of engagement from their own employees. Those who can eliminate mundane, repetitive tasks can free up time for their financial advisors to focus on providing highly personalized client service.
These trends point to exciting opportunities for wealth managers, allowing organizations to serve clients in innovative ways. It also allows providers to reimagine the client relationship, with possibilities to leverage newer technologies such as natural language processing and artificial intelligence at the heart of an evolving set of interactions.
Summary
Client preferences are rapidly changing toward digital and voice-enabled assistants – not just for basic, transactional activities, but to manage wealth and receive financial advice.
