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Delivering a Bold Future of Customer Experience in Asset and Wealth Management

When it comes to wealth management, service providers have to walk a careful line between technology and a human touch. High net worth individuals (HNWIs) are eager to access the best possible financial advice, which is why two out of five HNWIs millennials are actively looking for a new wealth management provider even as we speak.

However, given the competitive nature of the market and the challenges around delivering a superior customer experience (CX), most firms have resorted to cost-cutting. A leading analyst firm highlighted how leading wealth management companies like Vanguard and Fidelity introduced zero-fee fund offerings to entice customers. While this may be a short-term answer, it leads to a destructive price compromise for the industry, ultimately ending in poor customer experiences.

To stay competitive without impacting profitability, asset and wealth management firms must adopt digital, operational, and CX models. Not only will this address the challenge of brand differentiation, but it will also help tap into the emerging opportunity of millennial investors, eager to engage via digital and subscribe to tech-friendly brands.

Here are three metrics that illustrate why the future of CX in this industry will be built entirely on a digital foundation:

  • Millennials and Gen-X (the ones most comfortable with technology) will control USD 30 trillion in investable assets by 2020.
  • This demographic is talking to their advisors in new ways, with 66% of Gen-X heavily influenced by the social media content shared by their wealth managers
  • A staggering majority of customers believe that tech-intervention is necessary at every stage of the CX journey (70% - awareness, 80% - engagement, and 85% - transaction).

What we are looking at is a holistic transformation of CX models in asset & wealth management. For a while, it was believed that robo-advisors would be a “magic bullet” for industry woes, allowing firms to mete out financial advice at a dramatically optimized pricing category. Human advice is typically expensive, costing 1% of assets under management (AWM) per year. Robo-advisors have been successfully deployed to reduce this to 0.3% of AUM –a cost that’s beneficial to both the customer as well as the firm.

However, this is only Step #1. As more millennials and Gen-Xers join the investor ranks, the demand for refreshed customer experiences is likely to increase. Pricing is only part of the story, with several other necessary elements coming into play:

  • Wealth managers must have a robust social media footprint, building trust among customers and aiding selection for the discerning investor. This can be complemented by a digitalized brand identity for the entire firm, making its product portfolio searchable and customer-friendly.
  • Once the selection has been completed, the onboarding process must also be digitalized, removing inefficiencies and confusion. For firms using robo-advisors, this process can become fully automated, moving from legacy phone calls or emails to web-based workflows.
  • Transactions and relationship building are the top two areas of transformation with every generation agreeing that tech-enabled transactions are essential. Further, customers expect regular updates on their assets, especially when the market is volatile. 15% of millennials want daily communications with their managers during these periods. Digital collaborations platforms tailored to industry needs could help address this opportunity.

Clearly, better CX in asset & wealth management isn’t just about providing reliable services at the lowest price point. It isn’t about automating processes for faster resolution, either. HNWIs (especially millennials) are looking for exceptional CX intertwined with trust, consistency, and transparency of their managers. Firms who can fulfil this requirement by leveraging next-gen tech-tools will stand to gain, even in today’s competitive market.

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