Investing
Digital adoption and wealth management in 2020
Published by linker 5
Posted on July 28, 2020
8 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by linker 5
Posted on July 28, 2020
8 min readLast updated: January 21, 2026
By Will Bailey, Chief Strategy Officer at InvestCloud.
Finance has slowly been “going digital” for over a decade. Now it has been forced to rapidly accelerate in light of current needs.
Different aspects of finance are at different stages of the adoption curve. Retail banking, for example, is one area where digital is very much a necessity in order to fulfil today’s consumer requirements. Wealth management is perhaps a good example of an area that is in flux – the pace of digital adoption has been increasing but there is still tremendous opportunity to innovate and differentiate with digital offerings that can provide managers with a competitive advantage.
A recent report on client experiences found that 46 percent of wealth managers were either partly or not at all satisfied with their digital offerings. Yet there remains reluctance by some wealth managers to undertake further digital transformation to deliver truly innovative client experiences. This is because of concerns around cost, time to deliver and the incorrect assumption that in order to innovate digitally, one must re-architect or replace existing legacy processing engines.
The current climate has demonstrated a rift within the industry, causing firms to be split into two camps. The first are those who embraced a “digital or die” culture in recent years and are completing – or have completed – development of digital offerings. The other is now realising the imperative for urgent adoption of digital.
Historical adoption
In the past, many firms saw digital as a means to solve specific business pain points. This included point solutions for client onboarding, portfolio management, and report generation. Driven by the desire to grow and retain clients or find operational efficiency, managers made these changes to keep with the times or to offer specific add-on functionality to remain relevant to clients. But those that get it right are firms that recognise digital as a core component of their client engagement and servicing strategy. Managers that have proven successful, view digital as an extension of their brand and as such eschew point solutions for a holistic and consistent dialogue with clients.
Demonstrated by the successful growth and impressive valuation of fintechs like Plaid, sold for over 5 billion USD to Visa; Personal Capital, sold for a reported 1 billion USD to Empower Retirement; and Galileo, sold for over 1 billion USD to Sofi. As well as the strong performance of incumbents that launched products that embrace digital like Goldman Sachs’ whose Marcus offering now has over 72 billion USD in deposits, the performance of financial institutions with strong digital products drives success even with the challenges of today’s market.
This highlights the shift in attitudes amongst clients. They now require instant access to information and the ability to take action; accessible at any time, anywhere and on any device of their choosing. Firms who make the effort to improve their digital offerings will continue to earn their place to compete in the market — whilst those who do not will be rendered obsolete.
From important to essential
Attitudes prior to the pandemic were that digital was an important means of supplementing pre-existing business practices, but not as the essential channel for client communication and management. These attitudes have changed.
We know that wealth managers pride themselves on delivering great client experiences, historically through face to face interaction. But lockdowns and social distancing have meant managers must find new avenues to offer the same empathetic environment for their clients through digital channels. This is a common theme that has emerged in many conversations, which is now leading to the notion of delivering holistic wellness advice.
Digital tools allow managers to take a holistic view of a client’s financial life and beyond. It does this by capturing information about their clients’ that goes far beyond simply finances. This includes health, wellness, and life goals. Holistic advice demands that the manager have a complete view of the client. This can only be achieved by deploying digital tools that allow the clients to share information in their own time over the course of their relationship with an advisor. I have seen that clients who successfully take this holistic approach do so with an integrated end to end experience. This will include dedicated pre-client portals that facilitate engaged prospects to seamlessly become clients and provide advisors and clients with digital tools to provide a holistic view of the future. This combined with behavioural science, machine learning and amplified intelligence tools that allow the adviser to quickly and intuitively foster deep relationships with clients rather than taking months to build up acquired knowledge via traditional means.
Ultimately, this empowers the client with community, knowledge, and a sense of relief — which is crucial at a time of unstable financial markets and where advisers cannot build physical face time with clients.
Recreating the workplace at home
In the current climate, digital is essential in the client communication space but also as a means to drive internal operational efficiency. Office closures have reshaped the way wealth managers work. For some, this is a simple transition – either they were remote by design, such as virtual family offices, or they had robust systems in place to manage the transition.
But one area that has come under renewed focus is the back and middle office. For many firms today, back and middle office operations are still manual-heavy processes; from client onboarding to regulatory reporting. If the goal is to ensure managers are increasing the number of clients they serve and only focus on adding value and profitability, then these tasks are ripe for automation.
But even more valuable than pure automation, is augmented intelligence – where automated processes include the lessons of the past and learn for the future thus delivering value across the wealth management value chain. A great example of how augmented intelligence has delivered major value across the value chain is Westwood – who not only automated their back office processes, but improved reconciliation accuracy by 98%, saved 80% of time in reconciliation and reduced cost by 50% by utilising the combination of process automation and augmented intelligence (Westwood Holdings Group, Q2 2019 Earnings Report).
Will Bailey
The aim here is to not just to make lives easier during a time of remote working and into the future, but to redefine how managers work for the long haul – serving more clients, better.
Overcoming the common misconceptions
From discussions with several firms, there is a common consensus that wealth firms need to provide internal users with a digital experience that reinvigorates excitement about their brand. But many erroneously embark on multi-year digital transformation projects before seeing a return on investment.
This approach is one that we like to call “old think”, where one starts their digital transformation by changing processing engines, making embracing new technologies feel like a pipe dream.
Managers must challenge this orthodoxy. They must embrace “new think.”
This manifests in a simple principle: that digital transformation must start with the user. Whether your target user is engaging with a Client Center or Advisor Center, a successful digital journey must start with your digital user. Getting advisers and their IT departments to embrace “new think” can be a challenge, but when the penny drops, the increase in client engagement, retention, growth and operational efficiency creates new believers and new opportunities.
Future gazing at the ‘new normal’
The digitisation of the wealth management industry must continue on course – it is an inevitability for any firm that wants to attract the next generation of investors.
But how they do this will change. Today, we are seeing a large number of firms using digital to protect revenue streams. Successful firms must look at how they can create new revenue streams and unlock efficiencies via digital enablement. This naturally leads on to full digital transformation.
This also ties into another significant and global trend: the need to provide holistic wellness. To resist the dual threats of fee compression and commoditisation in the client’s mind, wealth managers will be looking to grow in this area to ensure they keep close to clients and create “sticky” experiences that yield brand entanglement and translate seamlessly across online and offline environments.
Increasingly, wealth managers will integrate gamification, decision theory and behavioural science dynamics to achieve this. With these integrated into a hybrid, human and digital offering, wealth firms are in a good place to demonstrate competitive differentiation – ensuring a greater degree of loyalty and profitability from clients long into the future.
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