Online rivals and changing investors pose a challenge for wealth managers

The past two years of Covid chaos have been a bucket of cold water for wealth management. Not only has the pandemic indelibly changed the way the industry does business, but customers are reassessing how they invest their money.

The industry aims to provide security and clarity to its customers. However, he faced a tough environment over the past year as he transitioned to working remotely. Meanwhile, the explosion of meme stocks, trading platforms and cryptocurrencies means it faces huge competition in its ecosystem.

On the one hand, the managers guided the customers through the necessary documents regarding data protection and data security. On the other hand, they listened to the same client describe their investments in the unregulated and anarchic world of cryptocurrencies and non-fungible tokens (NFTs).

Online users today want two competing factors from wealth managers working remotely: quick access to their money and the certainty that that money is safe. Meeting these demands has been the biggest challenge for wealth management during remote work.

Know your platforms

Smart wealth managers can achieve this by ensuring that different systems can communicate with each other seamlessly, says Alexander Newton, managing partner of

Cambria Wealth Management. “Knowing that you only have to enter details into one system not only saves time, but also reduces errors by ensuring that we are all working on the same customer data. Continuing to connect systems to gain efficiencies and improve the customer experience is a never-ending task. »

Successful wealth managers now offer hybrid advice through a selection and combination of communications, ensuring the client gets what they want, when they want it. Videoconferencing gives personality and face-to-face access. Messaging and collaboration tools like Microsoft Teams and Webex allow instant access, while products like Docusign or Alt Ave allow electronic signing of documents. On the bespoke side, sophisticated client portals have also emerged, allowing advisors and clients to work together through integrated video and screen sharing, says Tim Thompson Rye, Chief Technology Officer at Progeny.

“MoneyInfo and CashCalc have the ability to transform the customer experience virtually overnight. The main benefits of these out-of-the-box options are instant access to information such as portfolio ratings, ability to sign, store and access important documents securely, and the ability to communicate with advisors securely.

Technology has changed the way customers view their finances — and the way finance views them, says Thompson Rye. “Surprisingly, we have found that the average age of customers using our portal is higher than the overall average age of our customers. Older customers may have less time than younger generations and therefore appreciate the convenience of accessing information that a technology-driven offering can provide. This goes against the perception, or misconception, that the technology will primarily be used by younger customers. »

Power Play

In terms of compliance, digital offerings can record all customer interactions, all of which can be associated with customer files, Newton says. “One of the benefits of combining messaging, email and video calls is that we now have a more reliable audit trail of our consulting process. This pairs well with our back-office systems, which automatically save messages to client files. This does not remove the problem of human error, but greatly reduces the risks. »

However, each recorded item creates a larger attack surface for cybercriminals, with such incidents up to 238% worldwide in the first two months of the pandemicsays James McQuiggan, Security Awareness Advocate at KnowBe4.

“Organizations have moved data and systems to more cloud-based solutions for easier management and lower costs,” he says. However, with more users working remotely and more data in the cloud, the opportunity for cybercriminals to attack them while they are isolated increases. This risk exposes the organization to various social engineering and phishing attacks or exploits against Internet-connected cloud systems.

As financial education becomes more available and easier to access, we envision people being in the driver’s seat of their own financial journey.

As his company invests heavily in cybersecurity, Thompson Rye admits Progeny is defending itself against more scams targeting end customers, who may be more vulnerable or have less access to cybersecurity knowledge and training. “We have a robust cybersecurity training program and have intensified our communications with our customers about potential cyber risks,” he says.

To continue offering advice outside office hours, many companies have set up secure chat systems that can only be used by verified customers. This is backed up by courtesy and security calls, Newton says. “We still rely on backing up our digital interactions with a phone or video call. For any particularly sensitive situations, our customers still need to feel they are dealing with a person rather than a computer.

Unpredictable competition

Remote wealth management also faces the challenge of competing advice – good or bad – from the internet. In August, shares of the Robinhood trading platform rose by 50% in one daybuoyed by episodes of “meme stock” – like the furore around GameStop – as work-from-home users became exposed to new products.

The biggest threat to remote wealth management could come from the low interest rate environment, with many people tempted to spin the wheel on the casino of online trading risk, says Anna-Sophie Hartvigsen, co-founder of Female Invest, an advice portal for Gen Z and millennial women. “We are seeing a generation of new investors taking ownership of their wealth themselves rather than delegating the responsibility to outside sources.”

With the increase in working from home, users also have more time to research alternative investment opportunities and do their own research. During the pandemic, massive gains for item exchanges like Dogecoin, Shiba Inu and GameStop stocks became crossover news events, as investors sought both financial gain and an adrenaline rush, says Hartvigsen. “Investing has increasingly become a topic on social media, which has led to the emergence of a new phenomenon: meme stocks. As financial education becomes more available and easier to access, we envision people being in the driver’s seat of their own financial journey to a much greater extent than ever before.

To survive, remote wealth management must follow these trends, not resist them. It must offer sanity and calm amidst the chaos of online investing, as well as providing the traditional standards of security that customers have come to expect.


Dolores W. Simon