Keeping pace with change - digital wealth services

There are plenty of hot topics in wealth management at the moment, from The Consumer Duty Act and ESG, to the drive for adviser efficiency. The retail sector has made significant strides in digital banking, raising expectations for other areas of financial services to follow suit. The question for wealth management firms is how to keep up with a rapidly evolving market.

Indeed, wealth management firms are facing a range of pressures; FinTech challengers, changing customer demographics, squeezed margins, and market volatility - all leading to increased demand for digital wealth services from clients.

Established firms have the advantage of high-value clients, considerable expertise, and an in-depth knowledge of clients. Building these strengths into a digital strategy will be the key to success, addressing the changes in expectations for digital services and the demographics of High-Net-Worth (HNW) investors, who are increasingly likely to be younger and, therefore, will expect digital services as standard. Addressing the threat of challengers does not mean emulation but taking the best of these business models and applying it within a traditional firm.

For example, if a client can update their address via a secure portal or app, it is more convenient for the client and means that high-value staff are not taking calls for administrative work. The added benefit is that these digital wealth tools can empower front office staff, who can focus their time and expertise on relationship building rather than manual administration.

Indeed, often, when we talk about the digitalisation of any aspect of a service or product, there is an expectation that it will mean cutting staff. This is unlikely to be the case for private banks and wealth management firms because of the importance of delivering a high-value, personal service. Digital-first processes do not mean cutting staff but focusing staff time on where they add the most value - building client relationships - rather than routine administrative tasks.

Digital reporting also helps clients in a Consumer Duty context. The FCA has put a lot of focus on ensuring that clients understand their obligations and risks for investment. The challenge for providers is not only to check that all relevant information has been received and understood but also that all this data is tracked. Digital reporting is more than just a convenient alternative to paper reports for clients.

Usage statistics on a portal and app can provide invaluable information on a client’s requirements. Of course, such statistics alone cannot fulfil all the Consumer Duty Act's requirements, but they can provide support in the form of a complete audit trail. As with other aspects of digital services, this allows the expert staff to keep their focus on their clients rather than on ensuring there is a record.

It seems like every financial service these days has a supporting mobile app. Even in areas where personal service is paramount, such as private banking or wealth management, there are advantages to having a secure mobile service. For some customers, it will be their primary route for online access, and they will be frustrated by a web-based portal that has not been designed for their devices. For others, it may be a convenient reference point during a meeting with their adviser to check their balance or make a transfer. Some people may prefer to read reports on a larger computer screen but check simple facts or make a quick enquiry via their mobile. Any changes to digital services should include both a web-based portal and a mobile app as standard.

Along the same lines, digital tools can also help financial institutions by transforming sheaves of paper reports into a dynamic digital dashboard that allows clients to view their portfolios in numerous ways.

For example, a client may wish to view their portfolio’s performance benchmarked against the broader market, their progress toward an investment goal or the composition of their holdings based on ESG categories. As well as being another important factor for meeting Consumer Duty requirements, these intuitive, easy-toread reports will improve client engagement.

In this, as in all other aspects, we can see that digital tools can play an important role for clients and advisers. As well as saving the adviser’s time and creating an audit trail, the increased engagement gives advisers more opportunities to discuss the portfolio, upsell further investments and strengthen the relationship for better client retention.

There is a lot for financial institutions to consider when building a new digital service. There is also a risk of overwhelm and ‘scope creep’ by aiming to deliver all aspects at once, continually adding more and finding that the project becomes mired in delays and development. Before rushing to development, it is important to note that digital tools are not a panacea for all the efficiency measures, regulatory requirements, and customer service provisions a financial institution may wish to implement. To deliver a premium online experience, banks and wealth firms must first look at their processes. Expecting to transfer paper-based, manual processes directly into the digital channel will result in a digital wealth service that is slow and difficult to use.

The fundamental principle for any major digital project is 'more haste less speed'. This may seem counter-intuitive when seeking to accelerate and expand digital wealth service provision, but it will lead to faster and more sustainable innovation that meets and exceeds client expectations, leading to client retention and increased share of wallet.