Digital Revolution: Why Wealth Managers Should Embrace Digital Transformation

As with many traditional industries, wealth management is on the cusp of a digital revolution, yet, not quite ready to embrace it. According to PWC, two thirds of asset and wealth CEOs believe technology will reshape “or significantly impact” competition in the sector within five years, however only one in ten said they plan to strengthen their digital capabilities. In addition, only 27% said they are looking to collaborate with startups, a lower percentage compared with both banking and insurance CEOs.

So if it’s generally accepted that digital transformation is huge, why are industry leaders not rushing to embrace it?
The problem, it appears, is that many wealth managers – 50%, according to one survey, feel that their “less tech savvy clients,” likely meaning the generation now moving to retirement, “hamper their firm’s ability to build out a fully digitized service and take full advantage of new technologies.” Research from McKinsey concurs that client uptake of digital advice offerings is slow. And this demographic challenge is not limited to the customer side, at least in the U.S. – a Cerulli study reveals that by 2022, the U.S. wealth management industry is likely to face a shortfall of at least 200,000 advisers, as many current advisors head to retirement.

The opportunity – and the risk

But while the overall move towards digital customer advice is relatively slow, the potential gains are great. In the US, millennials with $100,000 in investable assets control the largest portion of at-risk assets managed by traditional financial advisers. And half of those investors, say they “probably will” or “definitely will” leave their current advisory firm, compared to just 8% saying that among all other generations of investors. In fact, according to one estimate, wealth managers unable to convince young clients to stay risk letting go of $30 trillion in assets under management (AUM).

So wealth management firms are caught between providing high touch, traditional service to maintain strong relationships with their older clients, and embracing digital tools to provide personalized service and 24/7 access to money to younger customers. How can they win?

Adopt a hybrid model

Many of the biggest wealth management firms, Schwab, Merrill Lynch, Wells Fargo and TD Ameritrade among them, have launched the so-called “hybrid model”, which integrates an online experience, and technology, to complement personal interaction with their advisors. While this approach works very well for Vanguard, which now has $100 million AUM on its platform, some analysts have noted that the the model is hard to replicate for smaller players.

Deliver personal interaction with co-browsing

Wealth management is a high-touch industry – two thirds of wealth managers spend most of their time on client acquisition and onboarding. Sometimes, there is no substitute for human to human interaction. But at a time when all investors go online to research wealth management options, what if you could bring human interaction to the acquisition and onboarding process?

Consider this scenario: A client interacts with a wealth advisor by phone. The advisor wants to explain to the client details about his or her investments, and recommend new opportunities. Rather than simply explain over the phone, the advisor sends the customer a link (by email, social media or message), or directs the customer to a button on their website, to start a cobrowsing session. Once the client clicks the link, the advisor can share a browser screen and simultaneously video chat with the client on any web application, using annotations to highlight certain figures or opportunities. This setup requires no downloads, software, or plugins, making it ideal to connect even with less tech-savvy customers. Furthermore, it enables you to offer personalized service that differentiates your experience, strengthens emotional connection and trust, and improves operational efficiency through minimizing the need for travel time and so on. (Also, you can try cobrowsing out here for free immediately).

Become embedded in your customer’s financial ecosystem

According to Dirk Klee, COO of UBS Wealth Management, the wealth management industry is potentially going to evolve into a disintermediated, “open platform” model. At the same time, commerce, finance, payments, and other interactions are merging rapidly. And with these trends, partnership opportunities are arising for wealth management apps, tools, or content to become embedded within complementary digital services. One way of achieving this is through APIs (you can view my previous article on how APIs can drive KPIs here). According to Klee: “We need to do more than simply build new technology, we need to refit legacy platforms, build added value services and support our clients to make truly valuable connections”


Ultimately, there are a number of ways to bring digital transformation into the business. However, what is constant is that digital tools should be enablers of the customer experience, rather than an end unto themselves. I’ll leave you with one more thought. While the overall wealth management industry is slow to digitalize its services, according to McKinsey:

“Clients of digital attackers report high levels of satisfaction— 5 to 10 times higher than clients of traditional wealth managers—due in large part to their improved experiences.”

With Millennials entering the high-earning period of their lives, and an enormous handover of generational wealth just a few short years away, the time for the wealth management industry to embrace digital is now.