woman with a laptop

Wealth management has been undergoing profound change over the last decade. Driven by changing client expectations, demographic shifts, regulatory pressures and increased competition, wealth leaders are making unprecedented investments in digital technology and strategies.

Despite these investments, the overall state of digital transformation in wealth has lagged many other industries. In a recent PwC report, wealth management was labeled one of the least tech-literate sectors in financial services and substantially behind other industries. Factors that have inhibited progress include legacy infrastructure roadblocks, data integration obstacles and implementation challenges.

One implementation challenge, referred to as the “Knowing-Doing Gap” in The Technology Fallacy, highlights the gap between an organization’s plans or intentions to address digital disruption (87% of organizations) and their progress delivering on those plans (44%).

Like many chronic conditions, the risk of a future disruptive change may not be enough to inspire the urgent action required to mitigate that risk. With the arrival of Covid-19, this chronic condition suddenly became acute and has inspired an accelerated digital transformation agenda. Managing a remote workforce and all aspects of client relationships virtually has moved digital transformation to a top priority for most industries, including the wealth industry. A recent Twilio survey of over 2,500 executives globally reports that the pandemic will result in the acceleration of digital transformation plans by six years!

Based on a recent Refinitiv survey, wealth leaders are making priority digital investments in “client-focused automation,” including account opening, digital onboarding and KYC (87%); followed by “digitizing client communications” such as statements, confirms, performance reports and compliance documents (69%). Other digital priorities include building operational scale, automating regulatory processes and analytics.

From a client perspective, resetting digital priorities is urgent. According to the Refinitiv survey, 57% of investors were disappointed with the online experience offered by their wealth manager. As firms move to bridge the gap between their digital capabilities and investor expectations, they face the “moving target” challenge. As I discussed in my Planning for Wealth Management in 2030 column, catering to an increasingly diverse and digital-savvy clientele and responding to new competitors will continue to raise the digital bar for all wealth firms.

Returning to the “Knowing-Doing Gap,” how will accelerated digital investments deliver the necessary results? Leveraging available WealthTech solutions can deliver best-in-class capabilities and fast implementation but can also create a disjointed advisor experience. In-house app development offers control and customization but often results in time delays, cost overruns and added risk to the transformation agenda. A hybrid approach where firms leverage implementation-ready technology that can be customized and integrated into an existing tech stack offers a powerful compromise. This “Buy/Build/Blend” strategy positions wealth leaders to adapt rapidly to evolving investor expectations cost effectively.

As Covid-19 accelerates our industry’s digital transformation agenda, it is comforting to note that the vast majority of investors value human advice as much as ever. Augmenting that advice with digital technology will future-proof the hybrid advisor.