Two reports by the same organisation examine how wealth managers use technology to benefit their business and whether new devices might be a turnoff for clients.

Getting the balance right with how far wealth managers should go down the digital route is not easy. A couple of reports by the same group, GlobalData, bring that delicate balancing act into sharp relief. 

The data and analytics firm contends that using technology too heavily could drive clients away, rather than attract them, suggesting that a “hybrid” approach to tech and the human touch makes most sense. Another GlobalData report, which this publication received on the same day as the other study, said that using tech such as apps is vital in winning younger investment clients.

According to the group’s 2018 Mass Affluent Investor Survey, having access to a human advisor or consultant is seen as important to 66.7 per cent of mass affluent investors. “This shows the importance of the human aspect of wealth management services. If client-facing processes become over-digitalized it could alienate this large population of investors,” Oliver Wintle, wealth management analyst at GlobalData, said. 

A concern mentioned at a recent London conference focused on whether the wealth industry is digitalising processes for digitalization’s sake. Tesla was used as an example of the risks of this approach. It has been claimed that the car manufacturer became over-reliant on automation during the manufacturing process, which resulted in delays during the building of its Model 3 vehicle. Similarly, if wealth managers rely too much on technology they could lose the human aspect of their proposition, GlobalData said.

Digital tools can help advisors be more effective but it doesn’t remove the human element, GlobalData’s Wintle said. “In order to attract and retain the lucrative mass affluent segment, a hybrid approach combining digital tools with face-to-face contact is the best possible way of managing investment,” he said. 

The “hybrid” approach to models such as robo-advisor platforms appears to be the one that many clients are most comfortable with, particularly as financial affairs become more complex. A study by MyPrivateClient Research, the firm recently acquired by Cutter, made this point. (See here.)  A major debate is about how far technologies such as artificial intelligence can supplant or augment humans in dealing with some of the chores of wealth management, and whether clients used to regular personal assistance are comfortable with this. 

Another message, about using tech to help younger investors handle investments, is made in the second GlobalData report.

The organisation’s 2018 Mass Affluent Investors Survey found that 53.3 per cent of mass affluent investors between the ages of 18 - 34 agree that they are “easily flustered” when things are complicated. 

“It is important to remember that while these apps may seem easy to use to by the well-informed, tech-savvy crowd, it is just as important to ensure the same is true for less technologically advanced individuals, or even people who do not understand the market as much. Those providers that are not acute to this will lose out to competitors that provide platforms that resonate better with the masses," Wintle said.

“A digital product that is simple and easy to use can help companies welcome new users that were previously put off by jargon and complicated procedures. Therefore, it is important to keep a human-focused design approach when introducing a new product or altering an existing product. This applies both to fintech start-ups and to incumbents developing new offerings,” Wintle said.