A growing number of wealth management firms are investing to partner with or build their own technology solutions (robo-advisers) to offer better financial advice to customers.
However, too much reliance on technology may result in the loss of the human aspect of their proposition, causing their client base to shrink, according to GlobalData, a data and analytics company.
During the Digital Integration in Wealth Management 2019 conference held from 27 to 28 February in London, one concern mentioned throughout was whether the wealth industry is digitalising processes for "digitalisation’s sake".
Tesla was used as an example of the risks of this approach. It has been claimed the car manufacturer became over-reliant on automation during the manufacturing process, which resulted in delays during the building of its Model 3 vehicle. Similarly, if wealth managers rely too much on technology they could lose the human aspect of their proposition.
According to GlobalData’s 2018 Mass Affluent Investor Survey, having access to a human adviser or consultant is seen as important to 66.7 percent of mass affluent investors.
Oliver Wintle, wealth management analyst at GlobalData, commented: “This shows the importance of the human aspect of wealth management services. If client-facing processes become over-digitalised it could alienate this large population of investors.”
Meeting clients face to face is time consuming and often costly to advisers. The use of technology can undoubtedly aid the process, and using digital tools will help wealth managers in dealing with their clients more efficiently.
Mr Wintle added: “This could be achieved by introducing other methods and channels for advisers to communicate digitally with their clients. In order to attract and retain the lucrative mass affluent segment, a hybrid approach combining digital tools with face-to-face contact is the best possible way of managing investments.”