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Wealth & relationship managers should prioritise secure messaging in 2023


In the recent past, assets under management (AUM) for most companies in the wealth sector grew thanks to a buoyant bull market. Results and projections from 2021 were resoundingly positive, with assets growing by 11% in 2020 and ending the year at $103 trillion. 

The favourable conditions that were contributing to a strong market went hand in hand with a digital transformation impulse unlike anything seen before. With a global pandemic upsetting business, companies were forced to prioritise digital experience projects.  

However, while forecasts at the time were also generally positive, some analysts recognised that wealth ‘managers are entering a new era that will require them to adapt to new ways of doing business.’ Chief among this was the need to develop more secure yet flexible client communication channels, particularly when the pandemic hit. 

The stress-strain test for new digital initiatives

Many companies will be satisfied with how they reacted to the pandemic and feel confident that they have embraced digital channels to improve client communication. However, while their day in the sun with strong market-driven AUM growth – and the fees collected as percentages of AUM – may have made for rewarding revenues, it could also have led to a false sense of accomplishment. It appears the clouds have begun to converge and we will soon find out which initiatives are watertight and which aren’t.

This is because implementing digital initiatives during a naturally strong market is like installing a new roof in summer. You don’t notice the leaks until winter comes. The unfortunate truth is, the weather began to grow cold in 2022 and wealth managers must work harder for their fees. Whilst we aren’t in the depths of winter yet, there’s enough damp on the walls to see where digital transformation initiatives are failing. 

What does this mean for companies? Clients have become evermore used to a combination of digital channels with tech-first companies that serve them when and where they want. What’s more, when faced with shifting geopolitical and economic uncertainty, a strong digital-first service helps to mitigate risk and assuage doubt among clients. 

Yet to properly focus your digital transformation strategy, you first need to know who your clientele is and what they want.

Who are today’s wealth management clientele?

The wealth management market is changing significantly and this is undoubtedly having an effect on digital service expectations in particular. Take the so-called ‘great wealth transfer’ for example, which is the catch-all term to describe the natural passage of wealth from the Boomer generation to younger ones. In fact, it’s estimated that around $60 trillion will move from older generations to the next by 2060. Not only is the scale notable here, but unlike with other generational shifts, this one represents a substantial departure in mindset. 

The generations that will hold the wealth are also those that were introduced to Big Tech, smartphones, and online convenience at a malleable age. We cannot expect these individuals to operate in the same way as their parents, relying on in-person lunches to discuss investment opportunities. It’s for this reason, according to the above Capgemini report, that 80% of millennials look to establish new relationships with advisers from other firms once their parents’ wealth passes into their hands. 

The great wealth transfer, while substantial, is not the only change taking place in the wealth management industry. We also need to pay close attention to the rise in female entrepreneurship, with UBS’s Women’s Wealth 2030 predicting that women will own a combined total of 97 trillion US dollars by 2024. As PIMFA’s Shaping the Future of Digital Wealth Management claims, many products and experiences are still targeted exclusively at men, which risks alienating a huge chunk of the market. 

Finally, the democratisation of investment cannot be overlooked as innovative fintech companies break down traditional barriers. Incumbent institutions, which were originally reticent to embrace this new market, are now increasingly incentivised to provide innovative investment strategies and solutions.

New demographics, new expectations

What can we learn from this? Whilst there are undoubtedly many lessons, the most pertinent (and pressing) is the shift in service expectations across all these new demographics. Deloitte claims that 34% of millennial and 35% of Gen X investors believe that digital capabilities are an important factor when choosing a wealth manager. When we look at the over 55, this falls to just 16%.

And here’s where we get to the crux of the issue. If wealth management firms or private banks only offer new digital channels or self-service options, they’re unlikely to match service expectations. It’s not enough to offer phone calls, online video meetings, or a chatbot. Instead, all these touchpoints and more need to be combined to produce a seamless and cohesive experience that is, above all, convenient. 

With the end of the favourable market conditions in 2022, wealth managers & private banks are now animated to look more strategically at ways to grow AUM and will also need to place a greater focus on costs. This environment will, in turn, catalyse a renewed and sustained focus on the client’s digital experience.

Secure and compliant messaging as a means of accelerating AUM growth

Technology offers the wealth sector more than an opportunity to emulate face-to-face meetings with video. Used correctly and with the right tools, engaging with clients via a broader set of convenient digital channels provides an opportunity for clients to gain greater access to advice. 

More frequent yet meaningful client-adviser interaction at a lower cost is the key to increasing adviser efficiency. The logic goes that the most well-informed clients who trust their advisers will make assertive and quicker decisions increasing the client’s lifetime value. This phenomenon is known as conversational engagement and it represents a significant value driver for wealth management firms.

Furthermore, within this context, the means of communication that’s becoming most popular is messaging. Clients are turning to the convenience of SMS, WhatsApp, or some other social messaging tool to communicate with their adviser. And yet, this trend comes with significant risk to the organisation. The risk is twofold – a compliance risk due to a records-keeping challenge along with a business risk where the client communication management is over reliant on a specific adviser.

With the pervasiveness of messaging across society and sectors only looking to grow further, now is a good time to understand how it can be incorporated into your digital strategy to offer unparalleled convenience in a secure and compliant way. 

In my role as Director of Marketing UK at Unblu, I have frequent and in-depth dealings with the wealth management industry at a macro level. The trends I’m witnessing are growing stronger year on year and I’m increasingly convinced that providing convenience without sacrificing compliance is a key strategic step that all firms or private banks must take. 

The favourable conditions may be at an end but there’s still plenty of opportunity out there to accelerate AUM growth, provided the service clients expect is delivered in a convenient and compliant manner. 


Conversational Engagement

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