Wealth managers that do not embrace digital technology will lose profits, clients and assets, according to industry specialists writing in a report on the issue.
Competitors could take assets and customers as increasingly savvy consumers demand more flexible products and services that fit around their busy lifestyles, according to the report.
Stephen Gazard, managing director at Sesame Bankhall Group said there are firms which “are still largely paper-based with no web or social media presence and no real understanding of the changing environment”.
Advisers “who don’t adopt could get left behind,” he added.
Barry Neilson, business development director at Nucleus said: “With the rise of online wealth management and other options for people to gain financial advice, then those who don’t embrace technology may come under more competition which, at best, could lead to pricing pressure and, at worst, may lead to them losing clients and assets."
Industry spokespeople who feature in communication firm MRM's report had a warning for firms that invest in technology without being clear about their objectives.
Andrew Fay, co-founder of robo-adviser Munnypot added: “Any business which strategically decides to invest in technology will venture into significant areas of risk, so a comprehensive plan incorporating the risks and key drivers will be critical. Also, any half-hearted approach will almost certainly not deliver the appropriate value back to the business.”
“Digitalising a firm will amplify any imperfections already present in the business, so it cannot be looked at in isolation,” said Kevin Russell, proposition director at SEI.
Mr Gazard said he had “seen firms spend all their time designing and developing technology solutions and forgetting they still need clients."
According to the industry specialists, for those firms that do choose to embrace digital technology, there are considerable opportunities.
“It can be deployed to deliver a range of benefits, including access to new clients, new markets, lower costs via automation and improved control through integration and straight through processing,” said Mr Russell.
Mr Fay added customers want convenience and a service which is easy to use and technology can deliver this incredibly well.
"A good digital experience is now becoming a common part of a service and if you don’t offer something which embraces technology, you can potentially be seen as being behind the times. The image of the business can also suffer."
Mr Gazard added that many customers now see social media as the natural first port of call for advice on anything.
"Information is cheap – in many cases free now – and during the early stages of life, there may not be sufficient complexity to encourage potential clients to engage versus ‘self-serve’ [advice options]."