Print this article
EXCLUSIVE: Industry Figures Discuss What The Wealthy Expect From A Digital Client Experience
Eliane Chavagnon
24 March 2014
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,” Kathy Engle, head of thought leadership at RBC Wealth Management, told delegates at the Family Wealth Report Summit this month. The Summit was comprised of three sessions, the first of which was centered on the digital client experience. The other two focused on technology and operations, and what keeps family offices awake at night – details of which will be shared by this publication in due course. As well as Engle, the first session featured: David Hoggard, vice president of sales at db corporate social platforms; Stacey Haefele, president and chief executive at HNW, Inc; William Sullivan, global head of market intelligence at Capgemini Financial Services; and Catherine Tillotson, managing partner at Scorpio Partnership. Sponsors of the event, which took place at New York’s Metropolitan Club, were: RBC Wealth Management; Capgemini; Appway; Equipos; Portcullis Group; Columbia Management; and SmartKYC. Stephen Harris, publisher of Family Wealth Report, chaired the first session and got the ball rolling by asking the panelists what they thought clients today expect from a digital wealth management experience. “Certainly, what we are observing – and this probably won’t surprise many in the room – is that high net worth individuals are looking for access to information, advice and services. Increasingly, they’re looking for this access on their own terms. That means 24/7 and across whatever channel or device, from wherever they are in the world,” Engle, of RBC Wealth Management, said. She added: “Regardless of how many products, services or touch points a high net worth individual might have with a particular organization, they expect to feel like they are dealing with one firm.” Capgemini’s Sullivan, acknowledging that what Engle said was “all relevant,” added that, in his view, the key factor to consider is that “digital is not a replacement” for an advisor-client relationship but a “supplement.” Preferences Sullivan highlighted that no two high net worth clients are the same and so their preferences when it comes to how they want their individual needs met will of course vary. “There is a small section of clients who have a strong preference for face-to-face and personal relationships over digital relationships, then there is a bulk of clients that want a blend, and a small group that want a digital relationship,” Tillotson, of Scorpio, said. She added: “What we are trying to focus on is how those parameters are going to shift. I think all of us expect it to move more towards digital over time, not least because of the generation shift over the next five years. The assumption has to be that we are moving more towards digital, even though all of us will have clients who never go on the Internet for anything, let alone to interact with their wealth manager.” Tillotson also spoke about the role of digital tools in retaining talent, saying: “When a wealth advisor is considering whether the platform they’re on is effective for their client needs, digital is going to be a component of that – but they’re not going to know what is on the other side of the fence until they get there. If a firm they are working with can’t offer the full range of tools, they’re going to consider other options.” Likewise, Sullivan believes that the broad issue is more about how to set up practices that offer an array of digital tools for advisors and clients to choose from - depending on their needs - and access when they want. “What may be a low-value activity for one individual may be a high-value activity for another,” he said. Another issue is that inadequate online capability can cause judgment on a firm’s ability to provide advice and solutions – be that “fair or unfair,” Engle warned. For example, Hoggard, of db corporate social platforms, noted that 70 per cent of high net worth individuals have used information found on social media to either change advisors or investment decisions. “You need tools on top of the standard social media platforms in order to understand what’s happened after you’ve spoken, so to speak,” he said. “Whether or not you or your company use social media, the chances are that your clients do. And they are talking about you. It's vital that you know what they are saying and can respond to it.” “We create your own discussion…so you can then watch, analyze and understand what people are saying in your network space. We’re in the business to give them a space to have discussions and create communities, which you can monitor, analyze, understand and then guide and add value to.” High net worth versus ultra high net worth Harris, chairing the panel, asked if it is assumed that those at the higher end of the wealth spectrum will be more inclined to maintain a very personal relationship with their advisor, whereas those with a lower net worth will be more open to digital technologies. According to Tillotson, “that myth has been somewhat dispelled by experience.” “We certainly see in all of our research that the wealthier clients are more digitally active. But it’s a numbers game - I’m talking on aggregate. Of course, there will be variation within that,” she said. Tillotson also emphasized that many ultra high net worth individuals have made their fortunes by “being innovators,” and thus are in fact attracted to new technology. “It comes back to their overall fascination with innovation generally.” For Sullivan, the topic of digital needs in wealth management “isn’t so much about ultra high net worth versus high net worth versus affluent.” “It’s what are they looking to do. The ultra high net worth segment typically have more complex needs…for those elements of what you’re providing to those clients, that’s typically going to be face-to-face,” he said. He added: “That being said, we’ve also found that ultra high net worth individuals have higher expectations around real time reporting, consolidated reporting and 24/7 access.” Age-related factors Haefele, of HNW, Inc, said her firm sees “slightly different data and information” when it comes to younger versus older consumers in wealth management. In fact, “we find that age has less relevance as wealth levels increase,” she said. “Generally speaking, we think that with the younger demographic – and we all care about the children and the children’s children of our wealthiest clients – this becomes three times as important in terms of engaging with them early, which is not online or offline to them – it just is,” she said. Additionally, much has been said about the issue of an aging advisor workforce in the wealth management industry, as the US Baby Boomer cohort edges closer to retirement. Hoggard mentioned that, according to PricewaterhouseCoopers, $41 trillion of wealth is now moving down from the Boomers to the millennium generation. “It’s not only about new clients, but also about retaining the assets you already have. Through wealth transfer, you really are going to have to earn many of those dollars a second time, with a whole new client that has a different expectation around the service model,” Engle said. She highlighted that many firms with an aging advisor base are very mindful of building a succession pipeline of talent, noting a “great focus across the industry” on ensuring a diverse client-facing base to serve multi-generational clients. Security Somewhat predictably, given heightened awareness about data protection and privacy recently, a member of the audience raised the issue of security in the digital age. Hoggard posed an interesting question, saying: “If you say, is digital secure, the answer is, is non-digital secure? I think it is easily more secure than anything than is not digital.” Meanwhile, Haefele argued that “one of the biggest barriers to an integrated digital picture is the fragmented systems.” A member of the audience then considered that advisors need to be “rational…in between the electronic devices.” They should recognize, for example, that you can’t just transfer $1 million to a third party based on a single email request. But, as Engle put it, “digital does not replace the need for an advisor or the need for judgment – it is an enabler.” It was recognized among all the speakers that every kind of interaction between a wealth manager and a client has security risks, but that what is expected is that they are managed. “There is always going to be a balance between safety and innovation and I expect wealth managers will always err on the side of safety, which makes it very hard to differentiate in digital technology,” Tillotson said. The bottom line, according to Hoggard, is that: “There will be, soon, very few people who are neither digitally-interested nor social media-interested among your clients, I believe.”