5 minute read 26 Apr 2019
Side view of young woman with laptop using smartphone with night city on background

How financial advice is digitally evolving from screens to voice

Authors

Nalika Nanayakkara

WAM US Advisory Leader

Wealth and Asset management industry leader. Passionate about innovative market solutions as well as helping underserved demographic groups get the financial advice they need.

Phil Hennessey

Americas FSO Advisory Senior Manager, Wealth & Asset Management

Passionate about improving the quality and accessibility of financial advice.

5 minute read 26 Apr 2019

Traditional client engagement channels are being consigned to the past as voice-enabled tools and digital assistants take us to the future.

This article is part of our 2019 Global Wealth Management Research Report.

The velocity of digital innovation in wealth management is causing unexpected shifts in client engagement, with client preferences for smart mobile apps already eclipsing traditional channels. Meanwhile, an accelerating preference for digital and voice-enabled assistants is quickly taking hold.

Clients are beginning to demand technologies that can listen, learn, process complex language and anticipate needs – not just for basic, transactional activities, but also to manage wealth and receive financial advice. The ongoing challenge for wealth management firms is how to balance such evolving high-tech solutions with “high-touch” advisory services that offer clients the seamless and personalized experience they demand.

The pace of change should not be underestimated, as the move to new technologies is happening faster than most wealth management firms and their clients had previously predicted.

Clients are rapidly embracing digital and voice-enabled assistants – and current expectations may be understating the velocity of change.

Active man in his 50s setting smart wear device, checking the time, getting ready for morning run
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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 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
Hai

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.

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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
Hai

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
Hai

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.

  • In the third quarter of 2018, we worked with ESI ThoughtLab to conduct a comprehensive survey of 2,000 clients in 26 countries to understand their changing investment needs, behaviors and value perceptions.

    We profiled clients not just by traditional segments, such as age, gender, wealth and location, but also by level of education, profession, investment knowledge, risk appetite and psychographic profile.

    We also asked respondents to rate their knowledge in managing their finances and divided them into low, average, high and very high categories depending on their knowledge of common and complex financial products.

    To understand client movement in the wealth management industry for this article, we asked respondents whether they had switched or moved money from a wealth management firm over the past three years or plan to do so over the next three years.

    We also conducted interviews with executives at leading wealth management firms around the world to understand how they are rethinking their value propositions and business strategies.

    Levels of investible assets
    Mass affluent: US$250,000 to US$999,999
    High net worth (HNW): US$1m to US$4.9m
    Very high net worth (VHNW): US$5m to US$29.9m
    Ultra-high net worth (UHNW): US$30m to US$100m

    Age categories
    Millennial: born 1981–97 (age 21–37)
    Gen X: born 1965–80 (age 38–53)
    Boomer: born 1946–64 (age 54–72)

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.

About this article

Authors

Nalika Nanayakkara

WAM US Advisory Leader

Wealth and Asset management industry leader. Passionate about innovative market solutions as well as helping underserved demographic groups get the financial advice they need.

Phil Hennessey

Americas FSO Advisory Senior Manager, Wealth & Asset Management

Passionate about improving the quality and accessibility of financial advice.