These apps reduce clutter

Wealth management firms have work to do to improve their technology if they hope to keep their affluent clients happy, according to a new report from Toronto-based PricewaterhouseCoopers LLP (PwC) released on Tuesday.

Sixty-nine percent of high net-worth individuals (HNWI) with US$1 million or more in investible assets globally use online/mobile banking and more than 40% review their portfolios or investments online, according to the PwC report, entitled Sink or Swim: Why Wealth Management Can’t Afford to Miss the Digital Wave.

However, the report indicates that wealth-management firms are less tech-savvy than their clients, with some managers believing their firms to be advanced digitally when the only technology-based service offered is a website.

The good news for wealth-management firms is that HNWI do see value in working with financial advisors as more than 60% of HNWI say they receive professional advice for their savings and investments. Of those, however, only 39% would recommend their wealth manager to others and more than a few are interested in trying out other advice options.

For example, currently 14% of global HNWI use robo-advisor services. In North America that number drops to 6% of HNWI. Yet, the report found that although few people are investing through these digital platforms, a third of all HNWI who are aware of these financial technology (fintech) startups would consider using them in future. Furthermore, 47% of those under the age of 45 expressed an interest in signing up with a robo-advisor.

Thus, the PwC report suggests that all wealth-management firms, including those in Canada, need to build out their technology capabilities if they plan on staying relevant with clients.

“The findings in the global report ring true for the wealth-management industry in Canada as we see a younger and more diverse pool of HNWIs in the Canadian market,” said Raj Kothari, managing partner, greater Toronto, PwC Canada, in a statement. “Building a digital infrastructure informed by them, in order to meet their evolving needs, is required to ensure sustainable growth for wealth management in Canada.”

For wealth-management firms to stay relevant, the PwC recommends that they focus on accelerating their efforts in building digital infrastructures from the back office to how clients access their accounts and advisors. As well, firms can use technology to manage costs and create better client proposition through the use of personal data.

Finally, wealth-management firm don’t necessarily need to build their own platforms. Instead, the PwC report suggests that they should look to partner with fintech companies already in the market that can help them to catch up to today’s technology.

“Firms that successfully use technology to facilitate and scale up the personal, goal-oriented service for which wealth management is valued — rather than compromise or replace it — will be the industry’s winners,” the report suggests.

The report is based on research conducted in late 2015 and early 2016 of 1,010 HNWI in Europe, North America and Asia. As well, PwC conducted interviews with 100 client-facing relationship managers in wealth-management firms, including divisions in major banks, along with senior executives and CEOs at established wealth-management firms and fintech companies.

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