Technology is a relatively new addition within the wealth management industry, from robo-advisors to AI-enabled chatbots. However, the need for human financial advice will not be pushed to the side any time soon, says GlobalData, a leading data and analytics company.
Digital services provides advantages for wealth managers, as a robo-advisor can reach new demographics such as the mass affluent, as well as offering operational efficiencies through automation of tasks.
Sergel Woldemichael, Wealth Management Analyst at GlobalData, comments, “The UK’s Digital Integration in Wealth Management 2019 conference explored this topic in detail. Needless to say, the wealth managers in the room found joy in the reassurance that the more digitally advanced younger generations will still require human expertise.”
Face-to-face communication, among all generations, still reigns supreme when arranging the buying and selling of investments. Email and telephone communication are in second and third place respectively. Meanwhile, only 5% of millennial investors favourrobo-advisors when arranging their investments, with the majority still relying on a human planner or advisor.
Despite all this, traditional wealth managers have experienced multiple recessions and periods of market volatility, proving they are able to weather a storm. With a potential market downturn on the horizon, robo-advisors may not be ready to tackle the risks to client investments that come with it.
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Woldemichael adds, “Pigeonholing the next generation into a digital chamber is the wrong way to view millennials. Mobile investment apps are unable to cater to the emotional needs of humans relating to financial advice. A hybrid model is the best bet for the moment, and for the near future. Evidently, these digital natives are still seeking a human to collaborate with and gain valuable insight from.”