The research shows that clients trust wealth managers who are able to incorporate technology into their service, especially for portfolio management and client meetings.

A quarter of investors globally would consider switching from wealth managers that fail to modernise and embrace new technology, according to new research by Avaloq, a specialst in digital banking solutions and wealth management technology.

The research, conducted among over 3000 investors and 300 wealth managers across Europe, Asia and the Middle East, found that wealth management professionals are reluctant or unable to use investment advisory tools with clients. The findings are based on online surveys of 3,012 affluent to ultra-high net worth investors and 341 wealth management professionals with a minimum of five years’ industry experience.

Amidst a multi-trillion dollar/equivalent transfer of wealth from ageing Baby Boomers to the next generation, the threat that upcoming wealth holders will fire the advisors used by their parents, possibly because they want more digital offerings, is one of the developments keeping executives awake at night. 

Avaloq found that a willingness to embrace technology was a key driver of client trust in their wealth manager, with 66 per cent saying that being able to see investment analytics and portfolio visualisation was crucial to building trust with their advisor. Sixty-three per cent noted the value of being shown the impact of their investment decisions on their portfolio in live meetings.

Despite this, Avaloq found that wealth managers have little confidence in their technology systems, with 44 per cent of those surveyed describing their systems as outdated and nearly a third stating that their systems are not suited to their needs.

Barrier to progress
This dissatisfaction is preventing many wealth managers from meeting their clients’ expectations â€“ 37 per cent globally are still not using investment advisory technology live in client meetings. The main reasons include the user interface not being optimised for client presentations (78 per cent) and the systems being too confusing for clients (65 per cent). Other barriers include an inability to hide sensitive information and systems being difficult to navigate, the survey reveals.

This disparity between investors and their advisors is even more striking when looking at the UK alone. For investors in the UK, technology plays a bigger role when it comes to establishing trust in their wealth manager. Seventy-two per cent of UK investors note the importance of being able to see investment analytics and portfolio visualisation and being shown the impact of their investment decisions on their portfolio live in meetings. Yet, half of UK wealth managers currently do not use investment advisory technology with clients – once again, due to the design not being optimised for client use and applications being too difficult to navigate.

“Our research reveals that while wealth managers are under increasing pressure from clients to incorporate technology into their offering, many are struggling to keep up due to complex, outdated and poorly integrated technology systems,” Suman Rao, UK managing director at Avaloq, said. 

“Despite this, their reliance on technology is growing by the day and demand from clients is only going to increase. If wealth managers want to remain competitive and ensure they are delivering top client service, they must have a well-functioning technology ecosystem,” he added.

The research covered 11 European, Asian, and Middle Eastern markets: Germany, Switzerland, the United Kingdom, the Netherlands, Belgium, Luxembourg, Hong Kong, Japan, Thailand, Singapore, and the United Arab Emirates. The surveys were conducted in February and March 2024. The Avaloq wealth insights 2024 report includes contributions from BlackRock, EY, Kasikornbank, NEC Laboratories Europe, Oracle and UnionBank of the Philippines.