How Wealth Managers Can Create a Scalable Premium Digital Experience for HNWIs

How Wealth Managers Can Create a Scalable Premium Digital Experience for HNWIs

May 20, 2022

  • covid
  • Digital experience
  • FinTech

Mark Trousdale, Chief Marketing Officer, InvestCloud

As more and more Covid restrictions lift around the world, there has been an inevitable new frenzy of divided opinion about the role the office will play in the future world of work. But for wealth managers, another more pressing hybrid work scenario looms large: how much will client relationships revert to face-to-face, in-person interactions, and how client preferences on this pressing matter do they differ along the wealth continuum?

by Mark Trousdale, Marketing Director, InvestCloud

In this relationship business, the high-end service traditionally demanded by high-net-worth individuals (HNWIs) may seem like the harbinger of a return to the more traditional routine of face-to-face meetings and phone calls. But don’t be so sure.

After two years of tumultuous change, expectations and preferences for how the world’s wealthiest want to engage with their wealth managers and financial advisors have shifted dramatically – and have been for quite some time. Already, many HNWIs were using online banking and enjoying the convenience of digital tools in other areas of their lives, at all ages. And the pandemic-accelerated digital shift seems only to be gaining momentum amid the mind-boggling Baby boomers expected to pass $68 trillion to younger, more tech-savvy generations. Add to that a greater focus on transparency and a desire to take a more active role in their investments – including investing differently as the ESG movement takes off – and it’s clear that HNWIs today want an experience digital much more personalized and intuitive of their wealth manager. .

So how can wealth managers and advisors translate the same highly tactile offline experience into the digital arena, and what benefits can this bring to their business?

Reshaping the digital experience for HNWIs

The merging of the vast possibilities of digital advice with the narrower scope of Robo advice has led some to overlook digital for certain segments of the industry. Some try to downplay the importance of digital because it’s often seen as only catering to the mass market – for example, pointing out that simple onboarding questionnaires create a one-size-fits-all approach that can never meet the needs sophisticated HNWIs. But that misses the broader capabilities of digital.

We need a new model for how customers can digitally interact with their heritage – one tailored to their unique needs and preferences. This is essential whether you seek excellence in client communications or planning. And indeed, it’s as much about flexibility in experience and understandability (intuitiveness) as it is about reflecting that you understand and share your customers’ feelings, digitally. This is called “digital empathy”. The future of wealth management depends on it, especially since it is true for all levels of wealth and especially for HNWIs.

To achieve digital empathy for excellence in communication and planning, wealth managers must recognize and deliver digital solutions tailored to a range of unique digital clients that go far beyond traditional wealth segmentation by age, gender, wealth, etc. They must incorporate characteristics such as financial interests, ESG values, digital literacy, approach to digesting information and appetite for setting life goals. This means that portfolios and products – and also digital experiences – are tailored to the customer and not the other way around.

For example, many HNWIs are increasingly showing a desire to become more and more involved in their investments. With an in-depth knowledge and interest in the financial markets, they want to take a more active role in their investments and align them with their values. They may want to approve all investment decisions or have a portion of the funds to tinker with themselves. Educational tools rather than over-managed or advised solutions will speak to them better, helping them build investment models or recommend different products to try. But chat, video calls and other digital communication channels with their financial advisor should remain open when needed. The key is that they call the shots.

Other HNWIs – although fewer and fewer – may wish for a more traditional approach. These might still wish to receive PDF reports – which can certainly be done more efficiently digitally using publishing to a customer portal. They can check their investments online, but they need the reassurance of talking to their advisor in person or on the phone before making any decisions.

It’s about choosing the right model for the right customer. Likewise, it is not a question of purely and simply supplanting human advice but of supplementing it and enriching it with what is possible in digital technology.

End-to-end financial planning

Everyone needs a financial plan. That’s true no matter your wealth level or life stage, whether it’s saving for a home, your child’s education, buying a second home, or managing cash. But the fact is, HNWIs face more nuanced financial complexities – from tax, real estate and cash flow management to business succession planning – that require the specialized know-how of a financial planner. armed with the right digital tools for maximum operational efficiency. .

The problem is that this service to date has been very fragmented. A financial planner would produce a comprehensive and lengthy plan and might recommend a private bank to help implement it, but the onus ultimately fell on the HNWI (barely a white glove service). But in a digital environment, this process can be much more consistent; an advisor can build a tailored plan and, at the same time, recommend complementary products and solutions to help clients achieve their financial goals. While communicating effectively on the plan. It is much more transparent, practical and understandable for end customers.

Increase customer engagement at scale

HNWIs are often seen as the most valuable and sought-after clients of wealth managers, but increasingly they are not the most lucrative. According to Capgemini, while the wealth of HNWIs has increased by more than 70% since 2008, profitability declined for wealth management companies. They can bring huge sums of wealth to manage, but managing it is often labor intensive and squeezes margins. And that means all the best customer engagement in the world still might not support the business.

Identifying high-friction, automatable workflows is the first step to achieving high-quality service at scale — processes like prospecting, onboarding, and cash flow forecasting. The second piece of the puzzle is to partner well to benefit from smart digital tools to improve operational efficiency. It’s a dwindling, but still fairly common misconception that advisors need to be the best at building technology. While the truth is that they must be the best in advice and wealth management and partner well.

A great example of automation is the operational efficiencies that AI-powered Next Best Action recommendations can bring to the industry. Machine learning trained on customer data can provide key insights into how customers interact with their online wealth. Couple that with automated research analysis using natural language processing and AI, and advisors can quickly start generating personalized recommendations for products and stocks in a client portfolio that are as personalized as clients feel. really expect the best wealth managers to be these days. This means advisors can step in and engage effectively with clients knowing exactly when and how to give the best advice.

We are yet to see how digital tools like these can help propel the wealth industry forward. Wealth managers should embrace this and not have preconceptions that their HNWI clients are eager to revert to old ways of interacting. It’s about planning, communicating and implementing the right hybrid mix of advice that best suits the client while always looking for opportunities to leverage the greater degrees of personalization now possible in digital. This is the level of service customers expect. And thankfully, this doesn’t have to come at the expense of scale.

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