The ultimate guide to wealth management digital transformation

Digital transformation in wealth management contexts is traditionally slow. For years, the status quo of the industry was to prioritize in-person meets on an infrequent basis, often just once or twice a year.

And yet, as Capgemini argues, there is still an urgent need for digital transformation in wealth management. Firms that want to attract new clients and meet the changing expectations of current ones need to grab the bull by the horns and throw themselves into the initiative.

Firms that want to attract new clients and meet the changing expectations of current ones need to grab the bull by the horns and throw themselves into the initiative.

– Capgemini

Here’s what that involves.

What is digital transformation in wealth management?

In a wealth management context, digital transformation refers to the wide range of digital tools on offer to improve digital client experiences. There are many benefits to digital transformation, specifically around improved engagement, collaboration, and transparency, which can in turn improve assets under management (AUM) growth.

Why invest in digital wealth management?

This all sounds like a nice-to-have, but is it actually important that firms embrace digital transformation?

The short answer is: yes.

For years now, financial professionals have agreed that digital transformation is essential to profitability. Deloitte went so far as to call digital client engagement as “the Holy Grail of high profitability in the digital age,” while others claim that engagement is a truer marker of likely profitability than client satisfaction.

Digital client engagement is the Holy Grail of high profitability in the digital age.

– Deloitte

Wealth management trends (future of wealth management)

Another reason that digital transformation is essential for ongoing success in the sector is because the landscape has changed dramatically. These trends are presenting challenges in offering personalized financial advice.

Changing demographics

There has been a shift in the demographics who have access to wealth, requiring new services to meet their needs.

The Great Wealth Transfer

The Mass Affluent Market

Likewise, there are new markets – such as the mass affluent market – that require less personalized attention than high-net-worth clients or ultra-high-net-worth clients. And yet, they are still a valuable source of additional revenue, which calls for more efficient, digital-based tools to meet their needs.

Female wealth owners

The final notable demographic shift is the number of women who now own wealth compared to previous decades and generations. One Capgemini report found that women value the quality of the service much more than their male counterparts, and want more information on fees, product transparency, and data privacy and security.

Sophisticated client expectations

A combination of demographic shifts combined with the quality of service in other areas of life have had an impact on service expectations overall. While the deciding factor is still investment performance, personalization and timeliness of responses are increasingly vital.

And this isn’t just true for newer generations. A report focused on the UK market carried out by Unblu and Compeer found that 51% of HNWIs value self-service tools and digital technologies to receive advice and for portfolio management.

The seachange can be traced back to the pandemic, where, according to Capgemenini, 77% of relationship managers in the US and Canada reported losing out on business because they didn’t have access to the correct digital interaction tools.

Messaging channels that are secure and compliant

In the wealth management industry, two of the most important concepts are convenience and security. Recently, it has been difficult for wealth managers to strike the right balance between the two, with clients displaying preferences for the convenience of popular messaging apps like WhatsApp.

However, these forms of communication are simply not secure or compliant with industry regulations. This significant challenge has led to the rise of Secure Messenger apps, which mimic their popular counterparts while also offering added benefits such as security, compliance, and omnichannel capabilities. There are high-quality Secure Messenger alternatives now on the market that ensure clients get the messaging experience they want, without subjecting them or the organization to risk.

Cybersecurity and fraud

The reason that messaging channels need to be so secure is because cybersecurity threats appear to be growing all the while. Gartner reported a combined spending of $215 billion on cybersecurity, rising 14.3% from 2023. Leaps forward in artificial intelligence have contributed to this issue, making it easier for bad actors to increase the sophistication of their attacks.

Boosting RM productivity

Relationship managers have to balance offering clients a wholly personalized service with the accompanying administrative burden, which can hamper their ability to deliver on the former. Take for example the onboarding process, where they have to verify documents, perform KYC checks, and more, to the ongoing tasks associated with routine transactions, compliance, and so on.

Mobile-centric experiences

We have already touched upon the importance of secure messaging solutions, but this isn’t the only reason that providing mobile-centric experiences are important. Mobile banking apps in a retail environment have shown a huge increase in popularity, with a reported 72% using their mobile app to access their account information – a number that is rising all the time.

These habits will inevitably spill over into the wealth management space, particularly as the aforementioned client demographic shifts take place. As a result, it is increasingly important for wealth management firms to offer highly functional apps that bring together communication, document collaboration, and much more to ensure an end-to-end digital experience.

A new frontier: Generative AI in wealth management

While there are myriad trends to keep on top of in the wealth management industry, the most disruptive, which we have only touched on briefly, is Generative AI.

This technology is poised to transform the industry, with 45% of WM professionals planning to adopt it in some way this year.

The benefits of AI in wealth management

When talking about the benefits of AI, the initial assumption is that it will be used for portfolio management. And while this is undoubtedly true, it is far from the full array of benefits that Generative AI can offer – particularly on the advisor side.

AI financial advisors

AI is improving all the time when it comes to providing advice. In an article from MIT Sloan School, the director of the MIT Laboratory for Financial Engineering and professor Andrew W. Lo states that we are closer than you would think.

The advice offered is largely accurate and, while issues with bias still remain, the ability to target the tone and content of the advice to the individual is highly impressive.

AI for financial planning and analysis

One of AI’s strengths is its ability to use real-time data to find insights that can be used to make investment decisions. As with financial advice, the technology is becoming increasingly well versed in this area, offering swift and highly precise results.

The main obstacles to progress in this area will likely be due to regulatory pressures, as unbridled use of AI can leave organizations up to increasing risk. However, when used in conjunction with human intelligence and experience, the ability to better predict market movements is increasing every day.

Will AI replace financial advisors?

When a new technology is released, there is an inevitable onslaught of opinions and predictions regarding its use. One question that always rears its head is, will AI replace financial advisors?

This question has been ongoing since the rise of robo-advisors, with early predictions saying that there would no longer be any use for their human counterparts. Now, even with much more impressive technology, the general consensus is that humans are here to stay.

While AI will have a huge impact on the industry moving forward, the fact of the matter is that this is a relationship-driven sector as much as it is a technological or analytical one. Clients, particularly those with larger investment portfolios, value the support and guidance of a trusted investment advisor, making it even more important to cultivate close relationships.

Current examples of AI in wealth management

There’s a lot of talk regarding how AI will transform wealth management in the future. But what are the use cases that are proving most beneficial right now?

Providing quick access to advice

As mentioned, one of the most valuable use cases is the ability to offer quick access to advice. In our experience, this works best as a balance between information drawn from the organization’s Large Language Model combined with human intelligence.

The form this takes is much like a chatbot sidekick that serves the advisor during messaging conversations. Instead of wasting time sifting through the knowledge base, the chatbot will generate answers to questions that the advisor can edit before sending.

Proactive outreach

An Accenture study found that more clients – 39% to be exact – want to hear from their advisors more. Likewise, more frequent interactions can also benefit the advisors themselves, even contributing to increased AUM growth.

By using AI’s message-generating capabilities, alongside platforms for internal organization and outreach, advisors are better able to reach out to their clients and spark valuable conversations.

Summarizing previous conversations

Conversations, particularly on messaging channels, can quickly become long and unwieldy. When customers communicate across touchpoints and on different days, catching up on what was said can be time consuming.

With Generative AI, agents can get quick, accurate summaries of previous conversations, allowing them to hit the ground running and better serve their customers.

More streamlined meetings

Messaging is all well and good, but deeper connection with clients comes from meetings, whether in person or virtual. Although this is particularly true with newer relationships, it is also essential to maintain a current one.

That said, meetings can be time consuming. It isn’t simply the time spent in meetings that is the issue, but also having to find a time that suits, take notes, create transcripts, or follow up afterwards.

Many of these more mundane tasks can be solved with the help of Generative AI, making it easier for advisors to take more meetings and improve the frequency of client interactions. What’s more, AI can even be used to create and keep track of open tasks, further helping productivity.

Client mood identification

Client service isn’t always a bed of roses. Occasionally, clients will be unhappy with an aspect of their banking service, and will talk to support to complain or look for a solution.

Sometimes, however, if agents have a lot going on, it can be difficult to identify the clients who are unhappy immediately. With AI, agents can get emotion warnings, preparing them to engage in de-escalation techniques.

And it also works the other way around. We all know that happy clients are more likely to make a purchase, and AI can help agents to identify the right moment for an upsell.

Bridging language gaps

What happens if the advisor with the exact specialist knowledge to serve a particular customer doesn’t share the same language?

This is a common situation, and can often limit the access to information for non-dominant languages. With AI, advisors are now able to communicate more easily with anyone, allowing them to better leverage their internal resources or serve regions with many languages.

Managing risk with AI

It’s true that AI still presents risks in the wealth management space, whether regarding regulatory compliance, bias in investment decisions, or more. That said, the technology can also be used to help mitigate risk in certain situations.

According to clients’ personal preferences for risk tolerance or more, advisors can use predefined rules to determine the best course of action and make more informed decisions for the client.

Choosing the right wealth management software

Given the pace of change, it is essential for firms to embrace digitalization. The heart of any digital transition initiative is the wealth management digital platform that is used. As a rule of thumb, the quality of the service experience is tied to trust and a better experience will positively impact client perception.

So, what options are there?

Client onboarding software

The strength of a client’s onboarding experience will influence their perception of the firm moving forward. For this reason, it’s important to use a digital onboarding solution that offers a full end-to-end experience that is convenient, swift, and reduces the burden of administrative tasks.

Online scheduler tool

A significant friction point in wealth management is the time between a client or prospective client agreeing to a meeting, and actually getting them to attend a meeting.

To improve meeting attendance, firms need to draw on online scheduling software, which secures the time and date while also providing convenient information before the meeting takes place – including reminders. This is a key step in getting more clients as a financial advisor.

Online meeting solution

It may appear insignificant, but simply using Zoom, Skype, or similar video conferencing software can be detrimental to a firm, both in terms of functionality and compliance.

Instead, institutions should look to market-specific options that adhere to all regulatory requirements, operate in secured environments (such as wealth portals), and facilitate easy document collaboration or Co-Browsing.

Investing in a CRM for financial advisors

Everything from portfolio information to keeping track of tax documentation needs to be properly managed. One way of achieving this is by investing in a CRM or customer relationship management solution that is geared towards financial advisory.

If you decide that a CRM is the correct option for you, it is important to do your research and find one that meets your organizational needs. Platforms like Salesforce are good options for general needs, offering a wide range of features that will serve almost all institutions.

However, it is often more advantageous to look for a CRM that suits your specific context, whether you are a smaller firm such as a family office, require lots of integrations, or have other defining attributes.

Financial planning software for advisors

Speaking of integrations, financial planning software should also be top of mind when looking at digital transformation technologies. Ask yourself, what do you have to organize and manage your assets, whether traditional or otherwise?

Wealth management client engagement

That said, undoubtedly the most important software that you need to ensure client satisfaction is related to engagement, interaction, and relationship management.

These kinds of software are called digital client interaction management solutions, which will have a direct influence on the quality of the service your clients get. As with the CRMs, it is important to understand how a platform would work in your particular institution.

In an advisory context, it is important to look for capabilities such as security when it comes to client messaging or interaction, alongside high-level collaboration capabilities – and a consolidated space for clients to view, manage, and organize all interactions.

Case in point:
An Unblu private banking client

What does it look like when industry leaders from wealth management companies embrace digital transformation?

One Unblu customer, a private bank with a long-standing reputation spanning centuries, recently incorporated new technology solutions into their wealth management services. Here’s what happened.

In recent years, the institution has noticed there has been an increased demand from family offices for digital technologies to provide more personalized experiences. HNWIs increasingly expect similar user experiences as are available in a retail environment.

To improve client access to personalized advice, improve advisor experiences, and maintain security, they realized they needed to retire certain legacy platforms.

The goals of the initiative

Achieving this involved enabling Secure Messenger behind the client’s ebanking authentication – both on desktop and within the web portal – as a means of providing advice to clients more easily. Then, the teams sought to link the new platform with the institution’s CRM to gain access to these secure conversations in one place, while ensuring all compliance processes were maintained.

Finally, with the new system in place, the idea was to leverage Secure Messenger’s outbound and collaborative messaging capabilities, improving efficiency alongside the experience for client and advisor.

Delivering added value to clients

These steps allowed the institution to embrace advanced technology to improve the value of their offering. The improved efficiency allowed them to increase client touchpoints through semi-automated functionalities, alongside generating internal efficiencies thanks to the embedded collaborative features.

Embracing digital banking transformation with Unblu

The wealth management landscape has changed. Every day, manual processes are being automated, predictive analytics are more common, and customer experiences are inherently tied to digital technologies.

For RMs, WMs, asset managers, and more, the shift to technology-based operations and cloud-based platforms is firmly underway. The simple fact is that previous operating models aren’t enough to deal with today’s context.

In this new landscape, advisor productivity and client relationships go hand in hand, meaning that advisory services and digital services are now intrinsically combined.

If you haven’t already, now is the time to embark on your digital journey in the financial industry, retaining the best of traditional wealth management while embracing the world of digital transformation in wealth management.

Want to find out more about how Unblu can help you? Watch a demo today.