Winning in a changing wealth management industry

In recent years, the wealth management industry has faced numerous challenges that have affected its revenue streams. From changing client expectations to increased financial pressures to evolving competition, financial advisors and wealth management firms operate in a complex environment.

Adapting to these changes is crucial for survival. Organizations that embrace a strategic digital transformation will be better positioned to renew and strengthen client relationships, enhance customer experiences, and outperform competitors.

This article highlights the importance of using technology to meet investors' changing needs, build relationships, and achieve growth.

Wealth management: A rapidly changing sector

When undertaking a digital transformation, it’s important to understand how the wealth management environment is changing.

Financial pressures 
Following the global financial crisis, the wealth management sector experienced significant growth in assets and revenues. However, since 2022, rising inflation, interest rates, and market volatility have contributed to a more challenging economic outlook. Wealth managers now face sluggish asset growth and tighter margins due to heightened competition, price-sensitive clients, regulatory pressures, and market consolidation.  

Structural changes 
Historically, the wealth management industry has enjoyed stable margins and low capital costs. That has made it an attractive target for new competitors. Banks, online brokers, asset managers, pension providers, and health insurers are increasingly entering the market. These challengers are leveraging industry digitization and the rising wealth of younger generations to expand their market presence.  

Uncertainty  
Portfolio managers and their clients are navigating significant changes that include economic, technological, and geopolitical factors. These include:

• Slowing global wealth growth: The average annual global wealth growth rate of 6.6% from 2000 to 2022 (UBS Global Wealth Report 2023) is declining. According to the UBS Global Wealth Report 2023, rising inequality in both mature and developing markets exacerbates this slowdown. This is impacting wealth distribution and investment opportunities. 
• Geopolitical instability: Direct conflicts, multipolar rivalries, social tensions, and climate change are influencing investment decisions and client concerns. This has intensified the need for strategic advice. 
• Fraud and cybersecurity risk: As digital assets and online transactions grow, so does fraud. Robust cybersecurity measures are critical to protect client data and maintain trust. 

Client expectations 
Today's investors are increasingly tech-savvy. According to Advisor Magazine, the pandemic has heightened this trend, with 40% of investors prioritizing digital access more than before. In addition, 90% indicate that mobile will be their preferred investment channel in the future.

For over a third of millennials, a robust digital wealth management offering is a top criterion when choosing a wealth management provider, surpassing other factors like fees. Clients now expect personalized services and products, accessible through their preferred channels, anytime and anywhere.

Digitizing wealth management is key to adapt 

Wealth managers must navigate these complexities and adapt to evolving technological demands and expectations by enhancing their digital capabilities and transforming their organizations for the digital era. Firms that develop a comprehensive digitization strategy will gain a competitive edge and benefit from stronger client relationships, lower operating costs, and improved risk management and regulatory compliance.

Balancing automation and personalization

Typically, wealth managers use classic communication channels, such as telephone, email, and face-to-face meetings, to interact with clients. However, client preferences are changing; they now expect communication and experience to be as seamless as possible regardless of location and device.  

Clients are indifferent to the internal challenges of legacy IT systems, costly regulatory compliance, and other potential barriers to digital transformation. What they notice is slow and subpar user interfaces, excessive irrelevant information, time-consuming processes, and inadequate services.  

Wealth managers need to digitize processes to provide the convenience and speed most clients expect across channels. Automation meets these expectations, while also increasing productivity, freeing up resources, and enabling wealth managers to directly interact with wealthy clients on complex tasks or interactions that require more personal advice.

As an example, one financial institution equipped their salesforce of 650 advisors with electronic signature software. More than 80% of advisors were using eSignatures within the first 30 days of implementation. This helped improve customer service, meet client expectations, and free up more of their advisors’ time to spend with clients.  

However, wealth management firms should not implement impersonal automation. Instead, they should offer their clients the choice: take more control or get personalized service. This ensures a customer experience that is based on individual requirements and preferences.

Some clients start 100% digital by setting up a pension, for example. After a few years of regular investing, these clients might need more personal advice with a human touch. As client requirements evolve, it is important that firms can provide choice and flexibility with an evolving mix of digital and highly personalized services.

Wealth management digital transformation: Start with digital account opening  

Client onboarding is one of the most important stages in the client lifecycle and often determines the rest of the client relationship. Traditionally it has been a time-consuming and manual process generating frustration for everyone involved. Although it doesn’t require much personalization and seems like an ideal candidate for digitization, many wealth management firms still rely on a manual or semi-digitized onboarding process. As a result, new clients spend hours on the phone to share information and then meet face-to-face to verify their identity.

This is an area where wealth management firms can inspire from retail banks’ digital account opening transformation initiatives.

To solve this issue for their retail banking digital transformation initiative, Clarien Bank turned to the ID verification option in OneSpan Sign to run remote identity checks in real time. Once verified, then they allow applicants to eSign the documents. The ID and eSignature technology reduced the number of steps, removed touch points where customers were struggling, and enabled the entire process to be completed from a mobile phone. All while the bank gained a high level of identity assurance.

Today's clients expect convenience and speed. It is essential that wealth management firms respond to changing client demands by offering a user experience built around digital channels. Forcing a client to use multiple channels (phone, face-to-face, online, etc.) or paper-based process old processes can create poor first impressions and frustration. This can lead to account opening abandonment and negative reviews. Outdated processes can also impact client attrition, as clients increasingly associate innovation with the value of products or services.

A modern approach to client onboarding in digital wealth management 

The good news is that modern and effective approaches to digital client onboarding are available today. Modern tools, such as eForms, ID verification, and eSignature solutions for wealth management have made it possible to fully digitize the onboarding process.

These approaches not only help maximize efficiency and prevent fraud, but also reduce unnecessary friction in the client journey. After implementing an enterprise approach to forms and eSignatures, one firm hit 60% of its sales quota for retirement savings in the first 60 days of the year. They achieved this by enabling clients to easily complete and sign contribution applications using their phone or personal computer.

Whether considering account opening, client onboarding, or other forms of first-day processes, firms must embrace digital wealth management solutions to improve client experience, maximize assets under management, and achieve growth in an ever-evolving environment.  

By reducing time spent onboarding, reviewing, and taking corrective actions, asset management firms can free up time to focus on offering personalized services and value-added activities.  

Client onboarding is just the beginning of a transformed experience for both relationship managers and clients. A better digital experience improves everything from onboarding to ongoing client service in wealth management.

Ready to deliver an exceptional digital onboarding experience, from beginning to end? Download our latest white paper. 

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