The importance of technology
A quarter of investors would consider switching from wealth managers that fail to modernise and embrace new technology, according to the latest research from Avaloq.
The research, conducted among over 3,000 investors and 300 wealth managers across Europe, Asia and the Middle East, found that a willingness to embrace technology was a key driver of client trust. Indeed, two thirds of investors reported that being able to investment analytics and portfolios visualization was “crucial” to building trust with their adviser.
For investors in the UK, Avaloq found that technology plays an even bigger role when it comes to establishing trust with their wealth manager. 72% of UK investors surveyed noted the importance of being able to see investment analytics and portfolio visualization and being shown the impact of their investment decisions on their portfolio.
Despite the importance to investors, nearly half (44%) of wealth managers surveyed described their technology systems as outdated and nearly a third (31%) said their systems were not suited to their needs. Further, half of wealth managers in the UK do not use investment advisory technology with clients.
“Outdated” and “confusing”
Avaloq found the key reasons behind this were that user interfaces were not optimised for client presentations and the systems being “too confusing” for clients. Other barriers to technology use included the inability to hide sensitive information and systems being difficult to navigate.
One pain point highlighted by UK wealth managers, in particular, was the lack of integration between various technology systems. Avaloq found that 57% of UK wealth management professional feel their systems are not well integrated.
Suman Rao, UK Managing Director at Avaloq commented: “Our research reveals that while wealth managers are under increasing pressure from clients to incorporate technology into their offering, many are struggling to keep up due to complex, outdated and poorly integrated technology systems.
“Despite this, their reliance on technology is growing by the day and demand from clients is only going to increase. If wealth managers want to remain competitive and ensure they are delivering top client service, they must have a well-functioning technology ecosystem.”
The rising demand for digital
Rao’s comments are supported by separate research, commissioned by digital advice platform Dynamic Planner and conducted by AdviserSoftware.com, has shown that demand for digital solutions is on the rise across all income and age groups.
Dynamic Planner found that half of UK consumers want to receive personalised information electronically from their advisers to track pensions, investments and to access personalised content. 61% of the 4,000 consumers surveyed would like to do this via a mobile phone app.
“The findings in this report show that for our industry, embracing technology is an opportunity that should be ignored at its peril,” warned Dynamic Planner CEO Ben Goss.
Despite increasing demand for technology, the need for human interaction remains strong among investors.
Across the age groups surveyed by Dynamic Planner, an average of 57% still want to speak to a financial adviser to obtain investment advice, and 62% want digital solutions and human interaction to work in tandem.
Alongside in-person meetings with their financial adviser, the research found that consumers would like to track their financial information on a mobile phone app. This desire to combine the two increases to 80% of 18 to 34-year-olds. When looking at income levels, 81% of those earning £60,000 annually want to track their finances via an app. This rises to 88% for those earning £80,000 annually.