The technology opportunity

Square Mile Magazine, 2014. Original article (p86).

Screen Shot 2014-07-13 at 14.13.38The technology opportunity for wealth managers
We like a good app: it’s such a quick and easy way to access information at any hour. These are features not too often associated with traditional wealth management, but this is changing rapidly as the industry is embracing technology.

Keen to woo the next generation of customers, wealth management companies are taking to apps, Twitter, Facebook and LinkedIn with gusto – some and even use photo sharing site Flickr. As people are getting accustomed to quick and intuitive technology in other areas of life, they see no reason why their wealth manager should require a phone call when an app could do the job, or even an office visit if a video link would do the trick.

“We’re moving away from a time when investment firms would act as gatekeepers to information. Instead we are sharing the information with our customers, making it easier for them to make their own investment decisions,” says Danny Cox, Head of Financial Planning at Hargreaves Lansdown. The company’s apps for smartphones and tablets let users manage their investments at any time of the day or night, and keep up with live prices and new research. On Twitter, @HLInvest handles customer queries in addition to delivering news.

“What clients want is exceptional service. They want technology that enables this great service,” says Cox when asked what features customers are looking for. The key to making technology work for wealth management groups, and not just be “nice to have”, is to make it an intuitive and interactive tool for communication. Today, over half of Hargreaves Lansdown’s new business comes through digital channels, with around a quarter of website visits coming from smartphones.

Wealth managers who meet the demand for easy access may find themselves not just more attractive to tech-savvy new clients, but also receiving more business from existing clients. If wealth managers of the past used to sit down with clients once or twice a year, granting better access today means more informed clients reaching out for more frequent consultations and trades.

“All wealth managers have seen increasing demand from clients for greater visibility on their investments, which is correct. But technology has created an interesting situation, as relatively small retail investors now have access to state-of-the-art investment reporting systems, creating pressure further up the wealth scale for wealth managers,” says Paul Fletcher, Head of Marketing at London & Capital. And this may not always be ideal: “Greater visibility could lead to more indiscriminate wealth manager selection by clients, which is at odds to most of the ‘buy and hold’ investment strategies larger clients tend to adopt.“

Still, 24-hour access and the accompanying transparency is rapidly becoming the norm, and the winners will be the wealth managers who embrace the new tools, says Amit Pau, Director at technology-focused investment and advisory group Ariadne Capital:

“[Wealth management] is an industry steeped in tradition, and the future winners will be those that embrace digital to address the rapid needs of evolving customer needs. Digital, as an integral part of the wealth management, will be a strategic differentiator by driving innovation, improving efficiency, enhancing communication, and prioritised customer convenience.”

This conclusion is supported by research from asset managers SEI, NPG, and Scorpio Partnership. Released this spring, the study found that 92% of wealthy investors are making extensive use of digital tools ahead of transactions. But when large sums are at stake, most clients still view the manager as the lynchpin:

“The research emphasises the importance of a personal delivery in the wealth management transaction,” said Marc Stevens, CEO of NPG Wealth Management. “But it also highlights that for customers to be truly satisfied, their human contact at a firm must be supported by digital capabilities.” Almost 70% of wealth management clients under 40 look at their accounts at least once a month, the research found, while nearly 45% of those over 60 do the same.

Transparency is the guiding principle at Nutmeg, the UK’s first online-only investment company. Granting customers complete access to their accounts is only one feature of this, another being the fact that the company publishes its net performance figures. Nutmeg’s technology-driven business model makes it a different animal than its sales-driven competitors, a fact which CEO and co-founder Nick Hungerford attributes as an enabler of the company’s competitive pricing.

Nutmeg’s do-it-yourself approach, and arguably radical openness, means the company is frequently hailed as an innovator. But Hungerford resists the notion that dedication to communication and convenience should be considered ground-breaking: “All companies in the wealth management sector should be operating in this way. If they were, it would drive healthy competition, transparency of service and, most importantly, better customer experience.”


Published by Jessica Furseth

Journalist; Londoner.