Lastly, we found that consumers of all ages most frequently want support via phone or email, while text/chat support is gaining momentum with younger consumers. Our survey was done in the Fall during the height of the pandemic, so it is not a surprise that face-to-face support was on the decline.
However, recent events with Robinhood likely suggest an increase in the demand for phone support over email given the delays in response to service inquiries and the desire to speak with a person. As Robinhood noted on their Twitter account on Feb. 26 —“We’re working on expanding phone support. You can now request phone assistance on Robinhood for options position and account security scenarios with more situations coming soon!”
Clearly, there will be an increase in demand for phone support, and this is an opportunity for incumbents to leverage their Presence Advantage with omnichannel experiences and service excellence with strong established delivery ecosystems.
Hortz: Your findings on younger consumers make sense and are to be expected, but unexpected is your finding on in-person interactions and presence in a community not being valued by older consumers as a high priority. This seems to go against the grain of core assumptions of many financial advisors about their clients.
Sheldon: Yes, that one came as something of a surprise to us as well. But remember, this survey was conducted in the early Fall near the height of the pandemic, so face-to-face interactions were not possible. Like many industries, customer behavior was transformed overnight as virtual interactions became the norm.
The key question is how behavior will change once the pandemic ends. Clearly, some customers will revert to their previous behavior and a preference for face-to-face interactions with their advisors, but likely some of this behavior change will be permanent, and the need for physical presence and face-to-face interaction will be diminished.
But this does not mean the need for human interaction will be diminished. In fact, the need for personalized, timely human interaction supplemented by digital engagement channels in a coordinated, customer-driven manner will become a key differentiator. While incumbent firms have focused, and made progress, on delivering better digital experiences, leveraging their physical assets must be a key component of the omnichannel experience.
The Presence Advantage of incumbent firms cannot be overstated. Clearly the requirement for geographic proximity is changing, and it will require firms to stay close to their customers preferences.
Hortz: How does this overall research inform the positioning of financial industry incumbents versus younger FinTech entrants? What mindset should incumbents embrace?
Sheldon: I think this research―when combined with the four incumbent Advantage Factors we identified in our FinTech Disruption research―provides a useful framework and roadmap for incumbents to evaluate how their firms need to navigate FinTech disruption in the Investment Management sector, particularly as we exit the pandemic and firms will need to “reset” much of their go-to-market.
Furthermore, I believe that most of the disruption from FinTechs in the Investment Management sector results from customer experience (CX) innovation as opposed to Product Innovation or Market Innovation. FinTech entrants in this sector for the most part are not delivering new investment products or innovating markets, rather they are delivering traditional investment management services in new ways―providing “robo-advice” vs traditional active management and providing digital-first platforms that enable trading and portfolio management in “reduced-friction” ways.
The good news is that CX innovation frankly pays to the strengths of incumbents and the four inherent Advantage Factors:
1. Pathways Advantage: Their large customer based and established position.
2. Perceptivity Advantage: Their expansive historical customer data and insights
3. Presence Advantage: Their greater presence of customer support and human interaction
4. Platform Advantage: Their existing awareness and marketplace experience