Last updated: 19:46 / Thursday, 30 June 2016
Tech Report by PwC

Only 23% of 10m+ Clients Would Recommend Their Current Wealth Manager

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Only 23% of 10m+ Clients Would Recommend Their Current Wealth Manager
  • Only 39% of clients are likely to recommend their current wealth manager, falling to 23% among US$10m+ clients
  • Two-thirds (69%) of HNWIs use online/mobile banking, more than 40% use online means to review their portfolio or investment markets and over one in three are already using online services for portfolio management
  • 47% of those HNWIs who do not currently use robo services would consider using them in the future
  • Over half of HNWIs surveyed believe it is important for their financial advisor or wealth manager to have a strong digital offering
  • Two-thirds of wealth relationship managers do not consider robo-advisors a threat to their business and repeatedly insist clients do not want digital functionality

Only 39% of clients are likely to recommend their current wealth manager, falling to 23% among US$10m+ clients, according to the report ‘Sink or swim: why wealth management can’t afford to miss the digital wave’, published by PwC, based on a survey in Europe, North America and Asia.

Wealth management is one of the least tech-literate sectors of the financial services industry, and what is currently on offer is sharply at odds with what their clients, high net worth individuals, expect. When HNWIs were asked what they value most about their current advisor/wealth manager, their technical capabilities and digital offering ranked just eighth out of 11 options.

The work also finds that two-thirds (69%) of HNWIs use online/mobile banking, more than 40% use online means to review their portfolio or investment markets and over one in three are already using online services for portfolio management.

Demand among HNWIs for finance-related technology is, surprisingly, similar across both younger and older HNWIs, the exception being portfolio management, where under-45s are markedly more interested in managing investments online. Moreover, 47% of those who do not currently use robo services would consider using them in the future.

Over half of HNWIs surveyed believe it is important for their financial advisor or wealth manager to have a strong digital offering– a proportion that rises to almost two-thirds among HNWIs under 45 and in Asia. Where HNWIs are digitally confident, expectations that wealth managers should be technologically proficient are higher still.

On the other hand, two-thirds of wealth relationship managers do not consider robo-advisors a threat to their business. Moreover, they repeatedly insist clients do not want digital functionality, directly contradicting the importance their clients place on it.

 “This conflict within wealth management firms, combined with a client-base that feels only weak affiliation to its chosen providers, is creating a sector that is now acutely vulnerable, to digital innovation from FinTech incomers, including robo-advice services,” says Barry Benjamin, Global Asset and Wealth Management leader at PwC.

In PwC’s view, to survive, wealth management firms must accelerate efforts to adopt a comprehensive digital infrastructure, harness the potential of digital, and be willing to partner strategically with FinTech innovators.

Benjamin concludes:

“Wealth relationship managers enjoy high levels of trust among their client base. They are already recipients of a depth and breadth of data and insight spanning both financial and non-financial aspects. Any future wealth management model needs, without question, to retain this human aspect.

“However, in an increasingly complex world where the investment office may, for example, have to evaluate more than 200 different investment products for a client, and where clients are also aware of what automated technology can do in the investment advisory space, technology will be vital to keep the job both do-able and scalable for a growing audience.

 

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