It’s no secret that Big Tech companies are positioning themselves to shake up the growing wealth management market. Having already made its mark in payments, credit cards and lending, wealth management—particularly the mass affluent segment—is likely to be the next frontier of disruption.
The proliferation of new platforms is reducing barriers to entry, allowing firms to launch their own investment app or broker-dealer in a matter of days. And wealth clients appear receptive to new kinds of wealth offerings.
Case in point: 69% of North American investors recently said they would trust Google, Apple or Facebook for wealth advice and this figure is even higher for younger investors (including millennials and Gen-Z). These younger generations are also at least twice as likely as older investors to trust financial advice generated instantly by an algorithm more than advice provided by a human advisor (including 96% of Gen Zers and 79% of millennials versus only 38% of baby boomers).
This is a call to action for advisors. They would be wise to borrow a page from Big Tech’s playbook and transform how they deliver advice. That advice, in most cases, remains too generic with no references to clients’ motivations or life drivers. Big Tech has an existing relationship with most clients already (especially younger generations) and may know them better at a personal level based on access to their browsing or spending habits.
Here are three ways wealth management firms can deliver more customized experiences and differentiated services, thereby keeping Big Tech at bay:
1. Expanding product offerings. Wealth firms have a built-in advantage over Big Tech—the ability to offer the wide breadth of products and advice craved by investors including lending, managed investments and active alternatives. But, given Big Tech’s propensity for industry disruption, now is the time for expanding product and service offerings, not complacency.
Our research also shows that four out of five investors expect their advisor to offer banking and insurance products. Here again, incumbents are better positioned to act quickly to provide a richer ser of services by integrating these products with wealth management offerings.
One major wirehouse recently announced it was adding new trust and estate-focused employees to help advisors review and accept clients’ new estate plans. Others are doubling down on cryptocurrencies or ESG-focused funds, and the tokenization of non-bankable assets such as real estate, which could lead to additional products. And many are rolling out or acquiring direct indexing capabilities, allowing advisors to create more customized portfolios.
2. Leveraging artificial intelligence. Pairing product advancements with analytics and AI tools will help ensure that advisors offer clients the right products at the right moments. Investors we speak to are hungry for a more hyper-personalized experience, with intuitive products and services from their advisors.
But there’s room for improvement. For example, most advisors use their wealth manager’s CRM tool to document conversations and update client information, but our research revealed that only 37% use it to determine which clients to meet and slightly less than half use it to determine which topics to discuss with clients.