The landscape of the UK’s wealth is changing. It’ll come as no surprise to hear that, currently, 47% of the UK’s financial wealth is concentrated in those over the age of 65.
But there are around 9 million millennials in the UK (just under 14% of the national population) who, thanks to their growing earning power and the likelihood of some inherited windfall over the coming decades, are about to come into a lot of money.
At the same time, we’re witnessing the growth of a new generation of technology-led investment and financial planning platforms – so-called ‘robo advisers’ – whose innovations are starting to percolate through to the rest of the market
So, what’s in store? What does the changing consumer and technology landscape mean for the way wealth management is delivered?
The ability to personalise digital customer journeys down to individual goals could have a huge impact on user behaviour
Built around your life
According to a 2016 report from PwC, 47% of high net worths under 45 who don’t use robo services would consider using them in the future. And it’s perhaps not hard to see why.
‘Across all markets and age groups’, the authors comment, ‘the world’s wealthy are technically comfortable. They welcome and now expect online and digital functionality in many aspects of their lives. They are willing to exchange personal information to be able to enjoy highly personalised services. Online technology has already become an essential means to manage their financial lives from banking to investments.’
Investors are, I think, increasingly appreciative of how technology can help to offer a more tailored, personalised experience – helping them to create and track their financial plan.
The ability to personalise digital customer journeys down to individual goals could have a huge impact on user behaviour – fostering greater engagement, and helping them to understand the impact of their short term behaviours on their longer term financial outlook.
And I think it’d be a huge win in the regulator’s eyes, too. The FCA has been clamping down on robo operators who tend to match-make investors’ risk profile with a pre-selected fund and not much else. The failure to identify a client’s ability to handle losses along with their overall objectives has been noted as a serious shortcoming.
Anytime, anywhere: your mobile wealth manager
Now, this isn’t about replacing face-to-face advice with technology. Research from Deloitte has shown that 82% of millennials would even appreciate more personal meetings with their investment adviser, not less. Instead it’s about using technology to create a compelling, engaging and easy-to-use experience that complements and strengthens the traditional personal relationship.
Thanks to technology, wealth managers could play a more adaptable, convenient role in their clients’ lives – helping them to manage their finances from their pocket.
The way a client interacts with their adviser will, I think, become increasingly flexible to their particular needs at the time. For simple tasks or queries, investors may prefer a ‘self-serve’ approach, whereby they’re directed to relevant, personalised articles that help around the clock.
And if they do want to speak to their adviser, they might not want that conversation to be through a formal face-to-face meeting – but instead over the phone or on a video chat.
Total wealth management
To properly advise on someone’s wealth, you need to see it all. Traditionally, this hasn’t always been easy to do in real time. But recent ‘open banking’ developments could make this easier than ever, potentially opening up a new level of proactive service from wealth managers.
By analysing their clients’ transaction data, they could be better positioned to monitor the level of available cash within their portfolios, making sure it’s in line with their risk appetite and short-term needs, while also ensuring they’re not missing out on opportunities for growth.
More affordable than you may think
So we’ve seen how technology could help to complement face-to-face advice with new, compelling and interactive experiences.
But by automating some of the more repetitive and operational tasks involved in delivering advice, it could also potentially make the whole thing cheaper, too. Who knows, it could open up the sector to a whole new demographic of clients…
At Octopus Wealth, we’re developing technology that we hope will create a new type of user experience for clients. We’re really excited about the role that tech can play in complementing real, human expertise – stay tuned to find out more!