Wealth management lagging in digital
Almost 70 per cent of high net worth individuals (HNWIs) are now using online/mobile banking but only a quarter of wealth managers currently have digital offerings beyond e-mail, a PwC report found.
The paper, titled ‘Sink or Swim: Why Wealth Management Can't Afford to Miss the Digital Wave', found wealth management was one of the least technology-literate sectors in financial services.
Relationship managers in wealth management firms had earned high levels of trust among their HNWI client base, who were highly engaged with the preservation and enhancement of their own wealth. They also had access to a wide range of data of their clients' financial and non-financial lives.
"But the wealth management industry worldwide remains stuck at a very early stage of this digital journey, stymied by complacency, a focus on a traditional way of doing things and a widely-held belief that clients are resistant to any form of digital audit trail," the report said.
Both younger and older HNWIs were demanding finance-related technology, although those under 45 were significantly more enthusiastic about managing investments online.
"Where HNWIs are digitally confident, expectations that wealth managers should be technologically proficient are higher still and we can expect this cohort to continue to grow sharply," the report said.
"But client expectation is sharply at odds with what is currently being provided. Across the wealth management industry, current levels of digital adoption are chronically low.
"This is indicative of a sector that has been focused on human capital, assuring individual clients high levels of discretion, and where there has been little or no internal impetus to change existing business models."
While around half (46 per cent) shared details of their wider life goals with their relationship manager and 39 per cent trusted their manager enough to divulge information about themselves and their family, relationship managers had rarely documented or shared this information with the firm.
"This is partly the result of the client desire for confidentiality but also an understandable resistance among relationship managers to cede their client insight to the wider firm," the report said.
However, it also warned that firms would lose those clients when that trusted relationship manager left, and said clients were increasingly comfortable sharing more data if it meant the financial solutions would be more tailored to their needs.
AUTHOR
Malavika Santhebennur
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
