Industry Surveys

Advisor Characteristics Vs Digital Delivery: Which Is Most Important To The Future-Wealthy?

Eliane Chavagnon Editor - Family Wealth Report March 27, 2014

Advisor Characteristics Vs Digital Delivery:  Which Is Most Important To The Future-Wealthy?

The future-wealthy - those “at the front of a global charge up the wealth curve” - place less of an emphasis on digital delivery than certain advisor attributes, new findings show.

The future-wealthy - those “at the front of a global charge up the wealth curve” - tend to place less of an emphasis on digital delivery than certain advisor attributes, according to The Futurewealth Report 2014: Upgrading the Service Delivery, published by SEI, Scorpio Partnership and NPG Wealth Management.

The paper includes survey responses from 3,025 global respondents, with an average net worth of $2.9 million. It looked at the factors that matter to wealthy individuals when making a transaction with a firm and, crucially, the role digital technology plays in that experience. The report is the second in a four-part series of the Futurewealth Project.

The headline finding was that, when asked to rate the importance of various factors of a “great experience” during a transaction with a wealth manager, respondents focused largely on advisor attributes.

Specifically, the three highest-rated characteristics were the advisor’s level of experience (65), market knowledge (65) and understanding of individual needs (65) - all of which received the same rating on the “importance index,” which has a scale of 1-100.

By contrast, a wealth manager's ability to stimulate portfolio strategies online, their ability to customize online reporting and the extent to which their website is “navigable” all scored lower in importance than did an advisor’s characteristics, at 39, 38 and 37 respectively.

While the report noted that digital technologies “complement” human interaction, it emerged that those in the under-40 age bracket are in fact “re-orienting” toward digital solutions. Somewhat surprisingly, then, the youngest group gave the experience of their advisor a score of 58 out of 100, compared to 79 among the oldest respondents.

The report said that the importance of digital access “should not be underestimated,” describing the future-wealthy as “online enthusiasts.” Indeed, 92 per cent of them use online tools to support their wealth management activities, according to the survey. Meanwhile, even Generation Y are “still logging on,” with around half of this cohort checking their tax efficiency online every month. 

Digital of course plays a valuable role

Ryan Hicke, senior vice president of the SEI Wealth PlatformSM, said it was unsurprising that an advisor’s knowledge, experience and understanding of an individual were cited by respondents as the most important factors in the client service experience.

“However, it’s not as simple as finding the right professional companion for a particular customer,” Hicke said. “Across the board and especially among those under 40, digital plays a valuable role in their experience when you consider the amount of time they spend online and their reliance on digital for a variety of information. The sticking point for this segment, though, is that many of the digital tools are not engaging. Wealth managers may need to consider upgrading their technology to ensure customers are fully engaged.”

Looking at advisor performance - rather than what is deemed most important - the survey revealed that 63 per cent of respondents believe their advisor delivers a good performance with their website, while 61 per cent are happy with their advisor’s ability to create portfolio strategies online and 58 per cent are content with their advisor’s ability to customize online reporting.

However, higher performance scores were allocated to the human contact aspects, with over four in five respondents saying their wealth manager delivers a good performance in their knowledge of the market (85 per cent); understanding of individual needs (83 per cent); and level of experience (82 per cent) - an encouraging finding given that wealth management has long been perceived as a “people's business.”

Jaroslaw Knapik, senior analyst of financial services technology at the global research firm Ovum, recently spoke to Family Wealth Report about how the intensity of focus on information technology in the financial services industry is among the highest compared to other sectors. Knapik raised an interesting point, saying that, for some advisors, digital enhancements may be disruptive as they fear that technology may claim some parts of their business.

In other significant findings from the latest product of the Futurewealth Project, it transpired that clients with over 75 per cent of their cash with a single provider place the highest value on their advisor when making purchasing decisions. Among these respondents, an advisor’s maturity and level of market knowledge were rated at over 70 on the 100-point importance index. This finding certainly makes sense, as those clients who are almost “putting all their eggs in one basket,” will of course want to ensure that their primary advisor is up to speed on a range of factors.

“The advisor is clearly the linchpin of the service delivery experience, but that doesn’t mean they should discount the value of digital tools in supporting their clients’ needs,” said Kevin Crowe, head of solutions at SEI Advisor Network.

Crowe added that digital interaction is the “new normal,” so advisors need to ensure they “have the technology solutions to compete.” During session one of the Family Wealth Report Summit this month, Kathy Engle of RBC Wealth Management said that, in a competitive industry like wealth management - where trust is hard to earn but even tougher to retain - the digital client experience is “more important than it ever has been.” See the full write-up here.

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