One of the salient features of the report, led by economist Dr. Nouriel Roubini and produced with the help of sponsors like Bank of Montreal, Schroders and State Street, is that investors will expect more from their wealth providers than ever before. In addition to providing customised solutions, wider investment options and advice that leads to high returns, investors are increasingly concerned about the digital capabilities their wealth managers can provide.
According to the data, the desire for an enhanced digital client service crosses generational and wealth gaps, linking millennials, baby boomers and affluent individuals. And with 62% of the 2,000 investors surveyed demanding their providers make use of the latest technology, wealth providers need to respond to this digital imperative or face falling by the wayside.
The majority of the 500 wealth managers surveyed admitted they were developing digital capabilities to maintain that competitive edge. Introducing “anytime, anywhere, any device” access (55%), “omnichannel” customer experiences (48%) and technology-enabled planning tools (45%) were all highlighted as popular ways providers are currently upping their digital game. And approximately 59% of investment providers view building, partnering or acquiring fintech capabilities as a top priority.
However, Roubini’s analysis found a disconnect between current investor expectations around wealth providers’ digital strides and wealth managers’ actual preparedness to meet these demands.
For instance, while 63% of the investors surveyed believed their providers were able to ensure cybersecurity, only 48% of providers claimed they really were. Likewise, over two thirds of investors are under the impression that their providers can provide options across asset classes and global markets compared with 47% of firms that say they are prepared to do so.
“Even in normal times, wealth executives face a complex set of global economic, market and regulatory challenges. But, these are hardly normal times," said Lou Celi CEO of Roubini Thoughtlab. "Many investment providers in our survey do not appreciate just how fast these changes will happen-and the profound impact they will have on their business."
In order to meet clients’ higher tech expectations, wealth companies will need to radically transform their strategies, products and business models to become fully integrated, digitally driven businesses by 2021, he said.
"The winners in this new playing field will likely be large full-service institutions, mutual funds companies, and trusted names in wealth management," Celi added. "These organizations may be better equipped to meet the rising demand for specialized expertise, responsive 24x7 service, and wider investment and financial services."
Already wealth management firms that the report categorises as “in the advanced stages of the digital transformation,” have reaped the benefits of staying ahead of the curve. In the last year, these companies have seen assets under management increase by 7.2%, profitability by 6.8% and productivity by 9.4% because of technology, the report indicated.
Of the digital leaders surveyed in the report, 41% said that investing adequately in new technologies was key to digitally transforming their business. Making the customer central, nurturing an innovative culture and bringing the right talent on board were also deemed as essential to the transformation.