“They’re going to partner and buy, because building is very challenging.”
ParameterInsights’ data collection and use
ParameterInsights delivers syndicated and custom research that make us of scientific and reliable data and insights to help managers make informed choices. The main objective for the company is to understand the interplay between consumers and suppliers in the context of the evolving wealth management category as digital services proliferate.
“We got a question three years ago around this assertion that digital wealth was going to take over every millennial dollar.”
The assumption within Josh’s quote is that age is the key driver for the propensity to consume wealth management in these new ways; according to Josh, this assumption is not true.
ParameterInsights tries to understand the components, behaviors, and feelings of consumers that will resonate (or not) with these types of wealth offers. The company has built a consumer survey data product and algorithms into social media as a proxy to understand, at very fine intervals, the discussion about the wealth-management category to better understand what drives discussion and awareness, and use that to understand consumer behaviors as inputs to their research to help managers refine product and market strategies.
ParameterInsights has a parallel advisory business that helps companies in their specific context as they’re thinking about digital strategies and trying to build their digital capabilities.
Leading market players
Josh feels that companies that are trying to differentiate based on the elegance of their platform or the user experience perspective, or even the breadth of their service offering, will only face short-term gains.
“In a pretty short period we’ll be able to achieve almost anything from a wealth-management perspective in one place through digital.”One of the biggest findings of ParameterInsights’ research pertains to awareness, as few people have basic familiarity with digitally led wealth management—indeed, this is the biggest challenge for the market. An iconic example of a company getting traction in Canada is Wealthsimple, which also operates in the US and the UK. Wealthsimple scores very high in brand recognition. Additionally, Josh states that measuring success at this early stage by assets under management is not the right metric to consider when evaluating the strength of a particular company:
“That is not the way to measure it just yet, or to measure traction, because of that awareness conundrum.”
In addition to Wealthsimple, Josh names other firms that are ahead of the curve, such as NestWealth and WealthBar in Canada, and Betterment and Acorns in the US.
Future of wealth management
“We’re at the very beginning of thinking through these implications of digital and business models, how to deliver better or build [up] new products [and] services, as well as distribution channels.”
Josh emphasizes the need to modernize traditional practices in wealth management. In the longer run, once basic capabilities have been developed, the battleground will change; to win, firms will need to invest and spend time on the data, analytics, and “plumbing” behind their offering, as well as being more agile and able to provide the most unique and pleasant experience to the broadest range of customers.
The next five years will bring the rapid development of new, modernizing capabilities of existing business processes. It will be the firms who innovate using data and different tactics of engagement to drive awareness to the category of wealth management, and move customers into more, better margin businesses that will end up winning in the long run.