Prior to the pandemic, wealth management was a sector known for its personal, high-touch interactions. Customers expected face-to-face meetings in exclusive offices, often with relationship managers in tailored suits. However, COVID-19 changed everything, accelerating the industry’s digitisation process. This shift has led wealth management firms to explore new advisory models, including hybrid approaches that blend traditional and digital services. Global IT business products provider Comarch opens up on this transformation, and looks ahead to the future of wealth management.
One of the most significant advancements in this modernisation is the hybrid-advisory approach. This model combines the strengths of human advisors with digital tools, offering customers personalised investment solutions while reducing costs for financial institutions.
Additionally, it allows firms to serve previously underserved segments of the market, such as clients with smaller portfolios. But how can such a traditional sector embrace this digital transformation effectively?
Challenges along the advisory journey
The journey toward efficient wealth management advisory is fraught with challenges. According to McKinsey & Company, financial advisors spend 60-70% of their time on non-advisory tasks like client onboarding and preparing reports.
This reduces the time they have for more strategic activities, such as developing investment strategies and providing personalised advice. The key obstacle? A lack of unified platforms and an over-reliance on manual data processing.
An Accenture’s study reveals similar issues in Asia, where over 6% of relationship managers (RMs) spend half of their time on non-revenue-generating tasks.
The lack of integrated tools frustrates many of these professionals, with 11% feeling extreme frustration. Automating administrative tasks would increase efficiency, enabling RMs to focus on providing more personalised and strategic investment advice.
Wealth management institutions that manage to deliver a seamless, hybrid experience for both their RMs and customers are likely to remain leaders in the financial industry.
Empowering wealth management through hybrid advisory
A well-defined hybrid advisory model is essential for delivering a better client experience and can give firms a significant competitive edge.
Balancing human advisory services with digital tools improves both efficiency and customer satisfaction.
With the help of AI and automation, financial institutions can streamline processes like digital onboarding, automatic portfolio rebalancing, and even client targeting.
These advancements free up human advisors to concentrate on more strategic tasks, enabling them to offer highly personalised investment advice.
Furthermore, AI helps financial institutions understand customer preferences, allowing them to target the right clients at the right time with personalised products and services. Even communication can take a hybrid form, with advisors integrated into digital platforms to provide a human touch while maintaining high levels of accessibility.
Are financial institutions and customers ready for hybrid advisory?
While younger generations and retail investors seem more inclined to embrace digital tools, financial institutions face several challenges.
One key issue is finding the right balance between technology and human interaction. Some customers may still prefer the traditional high-touch approach, while others are more comfortable with digital platforms. Ensuring seamless, high-quality advice—regardless of whether it’s delivered by a human or a digital tool—is crucial.
Firms must also invest in the right technologies, such as AI-powered systems, and ensure that their staff are properly trained to use these tools effectively.
Another challenge is ensuring customer trust in digital platforms. Banks need to capitalise on existing customer relationships, integrating advisory services into their trusted banking apps.
Clients must also be educated on how to use these platforms effectively. Even once customers are comfortable with digital tools, they may still require access to human advisors, particularly for complex financial needs.
What is the solution?
The hybrid-advisory model represents a significant shift in the wealth management industry.
By combining human expertise with digital tools, financial institutions can provide a more efficient, personalised, and holistic wealth management experience.
This approach not only reduces costs but also allows firms to serve a broader range of clients. However, the success of this model depends on designing digital tools that complement human advisory teams and align with client needs and expectations.
If this can be achieved successfully, then these models will swiftly become more than the future of wealth management, they will monopolise the present too.
For more information, read the full blog from Comarch here.
Keep up with all the latest FinTech news here.
Copyright © 2024 FinTech Global
