Wealth managers must democratise and digitalise to survive

There's an urgent need for wealth managers and private banks to democratise and digitalise their service and product offerings to appeal to a wider audience of affluent clients, according to a new report from wealthtech specialist Avaloq. And those who fail to keep pace with changing client requirements and expectations in today's hyper-digital world risk losing out as the wealth management sector undergoes a digital-led transformation.

"A new generation of tech-savvy, wealthy clients, with a high demand for seamless digital services, is behind the unstoppable nature of these megatrends," says Martin Greweldinger, Group Chief Product Officer at Avaloq. "Technological innovations will enable wealth managers to serve a growing affluent segment efficiently, with a personalised service so far reserved only for (U)HNW individuals."

A new survey by asset and wealth management consultancy Alpha FMC meanwhile, says that there is already a gap between the digital expectations of clients and the capabilities of wealth managers, a situation that has been exacerbated by the coronavirus pandemic. And while some wealth managers are rising to the challenge of bridging the gap, there is still work to be done.

“It is clear that firms have had to react fast to the increased remote client servicing forced on them by the Covid-19 pandemic, and it is to their credit that they have managed to step up so quickly. However, our research reveals that, despite the priority that firms put on improving the customer experience, there is a long way to go," says Kenn Taylor, Head of Wealth at Alpha FMC.

Wealth management and financial advice industry trade association PIMFA meanwhile, is partnering Morningstar to bridge another potential expectation gap by launching an ESG Academy. The new online training platform is designed to help advisers deal with ever increasing client interest in ESG investing.

Pension scams are back on the menu again this week, with a new survey by Quilter revealing that, since 2017, almost GBP31 million in UK pension savings have been stolen by fraudsters.

PIMFA meanwhile, says that supervisory failings on the part of the FCA are to blame for both pension scams and and the ever increasing financial burden placed on advisers by the Financial Services Compensation Scheme (FSCS) levy. "It has been PIMFA's view for some considerable time that the standard of supervision carried out in this sector is inadequate and has led to significant market distortion," says PIMFA’s Director of Policy and Government Relations, Tim Fassamm. "Unless this is addressed, compensation costs will continue to rise, as will levy payments to the FSCS by our members."

And finally, more on another subject covered in last week's newsletter, with news that analysis by Quilter has revealed a dramatic decrease in the proportion of parents investing in the stock market on behalf of their children since the switch from Child Trust Funds (CTFs) to Junior ISAs (JISAs). Since the change, less than a third of JISA savings have been directed to stocks and shares with most accounts now held in cash. "The nudge toward long-term investing was powerful with CTFs, but that seems to have waned with JISAs," says Rachael Griffin, a financial planning expert at Quilter.

Wealth Adviser
 

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