The goal of technology is to make our lives easier, and in this day and age, technology is propelling us into the future. While this is true for many sectors, how does it affect wealth management? What will the wealth management industry look like in 2025 as opposed to 2019?
A report by Forbes found that the wealth management industry is consolidating and that, through technological advances, wealth managers are focusing on the standardization of offerings delivered through digital means. While this process of streamlining will improve margins, it isn’t necessarily what high-net-worth (HNW) investors are looking for. That isn’t to say that HNW clients aren’t welcoming of the technology – in fact they want more access to it, from digital performance reporting to interactive data visualization and more. This kind of technology exists across most industries now, so in order for wealth managers to succeed, they need to find other ways to be competitive.
As it turns out, HNW clients are looking for customization, expertise, and personalized service. Often times, their interests and goals include a wide range of family members and intergenerational beneficiaries. As such, their portfolios features an array of specialized risk, tax, growth, and other investment needs. HNW clients also have access to a number of opportunities not available to others, including specialized trusts and customized structures; for this reason, according to David Dahl, president and CEO of the Whittier Trust, “technology enhances, but does not replace, personalized attention and focus.” These are clients with specific needs and investments, for whom mass-market approaches simply don’t cut it.
It may be habit for investment houses and wealth managers to direct clients towards products and funds, but doing so doesn’t take into account individual needs. Furthermore, a personalized approach with attention to detail can lead to a variety of creative investment strategies beyond traditional approaches.
Intimacy and a personal touch are integral to the most effective wealth management strategies. While most communication and interaction will happen digitally, nothing can replace personal service.
W Darrow Fiedler 