‘Innovation’ is an inescapable term in the wealth management industry.
This focus on innovation is a response from firms faced with criticism that they were adapting too slowly to the wave of disruptive technology that was redefining so many other areas of financial services.
Wealth managers have invested heavily in their ability to offer the latest and most newsworthy technologies.
However, the bid to stay ahead has distracted many from the underlying reason for investing in innovation: to better serve clients in a rapidly evolving environment.
Today, the mosaic of modern wealth is shifting rapidly, and the issues and challenges that impact wealthy individuals have been changing even more dramatically than our industry has.
Meaningful innovation then, requires a deep understanding of how this mosaic is shifting and what this means for our clients in terms of the challenges and opportunities they face, and what they expect from their advisers.
First and foremost, the HNW individual has changed.
There have never been so many millennials, women, or people from emerging markets in the HNW and UHNW brackets; a trend that is set to continue.
China is set to have a million more millionaires by 2023.
These newly wealthy individuals have very different expectations, different ambitions, and different investment goals than historically wealthy demographics.
Millennial HNWIs, for example, are more likely to demand digital services.
However a survey by MyPrivateBanking reported 73 per cent of millennial HNWIs stated that they are unimpressed with their wealth manager’s digital app.
Clearly, the industry still has a long way to come in developing technology that allows us to communicate with digital natives in a way that meets their expectations.
While personal relationships and trust still matter immensely to this group, they also expect – and demand – a seamless digital offering, from being able to check their portfolio on an app, to communicating with their adviser via a chat function.
Wealth managers must invest in these types of technological innovations in order to provide the level of service that this demographic expects from any service provider.
And the benefits of this type of investment aren’t limited to a millennial audience.
The rising clientele from emerging markets will also demand a digital experience that gives them peace of mind that their advisers are always close at hand, no matter where they are in the world.
However, technology innovation alone is not enough to ensure we are meeting the needs of individuals that care as much about protecting and preserving their wealth, as the sustainability of their investment choices.