Wealth management is one of the least tech-literate sectors of the financial services industry and is falling well behind non-financial services industries, finds a report published by PwC.
PwC’s report titled ‘Sink or swim: why wealth management can’t afford to miss the digital wave’ reveals that just a quarter of wealth managers offer digital channels beyond email. This is in contrast to the fact that two-thirds (69%) of HNWIs use online/mobile banking, more than 40% use online means to review their portfolio or investment markets and over one in three are already using online services for portfolio management.
“Demand among HNWIs for finance-related technology is similar across both younger and older HNWIs, the exception being portfolio management, where under-45s are markedly more interested in managing investments online. Moreover, 47% of those who do not currently use robo services would consider using them in the future,” says a PwC press release.
Over half of HNWIs surveyed believe it is important for their financial advisor or wealth manager to have a strong digital offering. However, two-thirds of wealth relationship managers do not consider robo-advisors a threat to their business. Moreover, they repeatedly insist clients do not want digital functionality, directly contradicting the importance their clients place on it.
But what’s surprising is that wealthy clients are not willing to refer their financial advisors because they aren’t impressed with their services. When asked to assess what they (HNWIs) value most about their current advisor/wealth manager, their technical capabilities and digital offering ranked just eighth out of 11 options with only 39% of clients likely to recommend their current wealth manager.
“This conflict within wealth management firms, combined with a client-base that feels only weak affiliation to its chosen providers is creating a sector that is now acutely vulnerable to digital innovation from FinTech incomers, including robo-advice services,” says Barry Benjamin, Global Asset and Wealth Management leader at PwC in the release.
For wealth management firms to survive, PWC suggests:
- Accelerate efforts to adopt a comprehensive digital infrastructure that integrates every aspect of their activities and corporate culture, from the back office to how they service clients and market to new prospects.
- Harness the potential of digital to realise greater efficiencies, manage costs and advance their core client proposition by drawing on a much wider range of available data.
This report covered wealth relationship managers, CEOs, FinTech innovators and insights from a survey of 1,000 HNWIs in Europe, North America and Asia.
