Digital Transformation in Wealth Management: A Beginner’s guide – Part 1

Wealth management firms that have reached a high level of digital maturity have observed enhancements in various crucial performance measures.

Specifically, these firms have experienced a 13% rise in productivity, resulting in an 8% increase in assets under management (AUM) and a nearly 8% surge in revenue. Additionally, they have achieved a 7.3% expansion in market share and improved shareholder value by almost 6%.

Source: Liferay

What’s digital transformation?

You know how your older relative used to carry a flip phone?

And then smartphones came along and they were like, “What is this thing? How do I use it?”.

But now, they’re probably using emojis and texting you all the time, right?

That’s digital transformation! It’s all about old processes and ideas that are being transformed with technology.

And here’s a boring but necessary way of explaining it:

Digital transformation in wealth management is the process of using technologies to optimize existing processes and create new ones to:

  • Increase efficiency
  • Reduce costs
  • Improve the customer experience
  • Automate repetitive tasks
  • Limits manual processes, therefore less human errors.
  • Ensure KYC compliance
  • And a LOT more

Top 5 reasons why you should care about digital transformation in the wealth management industry:

1. Changing Client Expectations: Clients want access to digital channels for managing their investments and communicating with advisors.

According to a ThoughtLab survey, 89% of investors prefer to use mobile apps to manage investments and communicate with their advisors.

2. Cost and Fee Pressures: As clients become increasingly fee-conscious, financial advisors must find ways to provide value and transparency.

According to a study by Cerulli Associates, 69% of investors prefer lower fees, and 61% want transparency in fees.

3. Competition from FinTech: Robo-advisors and other digital wealth management platforms are gaining in popularity and market share.

According to a report by McKinsey, the assets under management (AUM) of robo-advisors are expected to reach $16 trillion by 2025.

4. Access to New Client Segments: Digital transformation can help financial advisors reach new client segments, including younger investors and women.

According to a report by BlackRock, women control $72 trillion in assets globally, and they are looking for advisors who understand their unique needs and preferences.

5. Improved Efficiency and Productivity: Digital tools and platforms can help financial advisors automate routine tasks and focus on high-value activities, such as relationship building and strategic planning.

According to a study by Aite Group, the use of digital tools can increase advisor productivity by up to 30%.

Benefits for advisors (with a touch of humour 🤡)

Improved efficiency 🍭

Digital tools can automate time-consuming tasks. So you can finally have a robot do the dirty work so you can focus on what really matters: schmoozing with clients and giving them that sweet personalized advice.

Better data management 🔮

Digital platforms help advisors learn more about their clients than a psychic at a county fair. By analyzing client data, advisors can give them the personalized service they deserve without resorting to crystal balls and tarot cards.

Increased accessibility 🦸‍♀️

Digital channels enable advisors to reach clients anytime and anywhere, making it easier to connect and provide support. It’s like a superhero hotline, but instead of fighting crime, you’re fighting financial chaos and confusion!

Enhanced client experience

With digital tools, you can give your clients a more personal touch than their favorite barista, making them trust and stick with you like gum on a shoe.

Competitive advantage 🦩

Adopting digital tools and practices can help advisors stay ahead of the curve and differentiate themselves from competitors, ultimately leading to growth and success in their business. Or in other words. It will help you stand out like a flamingo in a flock of pigeons.

In order to learn more about digital transformation in wealth management, click here to read part 2 or contact an industry expert today to schedule a no-obligation Q&A call

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