• June
  • 2021

WealthTech Trends for the First Quarter 2021

Advice and Experience Matter for Customers More than Ever 

The pandemic served as a catalyst for advisory services and the accompanying experience becoming the wealth management industry’s core value proposition. As their significance expanded, advisory services have also evolved along a continuum from entirely product-based approaches to more goal-based methods. According to the recent report by Accenture, the industry continues advancing towards a broader, holistic advice across liabilities, assets, and client experiences which includes intangibles such as trust, security, and access to exclusive networks. Moreover, the accelerated adoption of innovative technologies empowered wealth management firms to engage with customers in a more scalable way regardless of the client’s personal wealth size. These digital tools enable wealth managers to create more personalised recommendations faster as well as communicate their ideas much more efficiently and intuitively. Overall, customer interaction within wealth management is forecasted to progress into a blend of face-to-face and remote, providing more personalized and higher quality solutions.

The Demographic Transition in Wealth Management Industry

As advisory relations and inheritance transition from the older generation to the younger, tectonic shifts in the wealth management industry are imminent. There are a few factors that wealth managers need to consider when it comes to this generation. First, millennials are likely to understand that retirement planning should start early, however, many are starting their careers with considerable student debt and therefore are forced to delay saving for long-term goals. Moreover, unlike their parents’ linear career paths, millennials are more likely to shift between careers and prefer their investments to be sustainable. One of the best ways to attract customers of this generation is to enhance digital capabilities, both in communication and analytics. As suggested by Financial Advisor, 45% to 80% of millennials are likely to churn from their parents’ or grandparents’ wealth managers. Therefore, it is increasingly important to create engaging and intuitive digital wealth experiences. Check out our recent video on mortgage planning for an example of how Kidbrooke’s technology could help you create seamless digital wealth journeys in a fraction of the time it would take to build them from scratch.

How AI Is Changing the Customer Experience

With little to no human supervision, robo-advisors use algorithms to provide automated financial planning services. According to Moritz Spangenberg, Client Partner at Netguru, assets under management by robo-advisors are estimated to grow from $987,494 million in 2020 to $2,487,280 million by 2024 worldwide. As suggested by YouGov in the UK, 56% of the population still lacks expert support and accessible financial advice, and robo-advisors may have a shot at closing this gap due to cost-efficiency and scalability of their business models. Despite clear advantages, automated financial advisors are not a one-size-fits-all solution: 40% of customers would not feel confident using an automated platform. Therefore, it is unlikely that completely automated solutions would replace humans in the foreseeable future, and it is a primary reason we provide our software as an API. That way, physical wealth managers can still benefit from integrating core elements of automated financial decision-making in their workflows. This strategy can free up their time to focus on higher-value tasks, such as interaction with the customers and walking them through their financial situations. Currently, we are seeing a rise in demand for hybrid solutions, where wealth managers leverage financial analytics to optimise the quality, administrative side and timeliness of the asset allocations.

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