Get busy living [digitally], or get busy dying
Anyone familiar with the masterpiece movie “The Shawshank Redemption” with Tim Robbins and Morgan Freeman will remember this quote, with a slight modification. I added the “digitally” to the title, and it’s what kept echoing in my head as I read the annual World Wealth Report released by Capgemini and RBC Wealth Management. The annual report is an industry leading benchmark for tracking high net worth individuals (HNWIs), their wealth, and the global and economic conditions that drive change in the Wealth Management Industry.
So why the quote? Well simply, if you check out their results from the digital and social surveys and have any inclination on the evolving trends of consumer buying behavior, this report should serve as a major wake up call for advisors and their firms that the “big” money has gone digital.
“Digital has become the new wealth management industry mandate for meeting client expectations, providing integrated client experiences, reducing flight risks and increasing profitability. Regardless of age, wealth level, geography and need for advice, HNWIs are demanding digital capability from the wealth management industry….”
According to the survey over one-half of respondents claim that all or most wealth management is digital and nearly two-thirds of clients with at least $1 Million or more in investable assets expect to manage some of their wealth digitally in the next five years. The fast-paced advances in technology have affected all levels of investors and consumers and their behavior when it comes to the purchase of products and services and the need for information. We have become conditioned to expect access to services and to information on a 24/7 cycle that is quickly becoming standard — and financial resources are not immune to this expectation. In addition, the high rate of acceptance of digital channels by HNWIs, illustrated in the report, shatters a couple of long-held beliefs about the use of digital services in wealth management — namely that they are not being used
As a result, advisor and firms that have yet to adopt a digital or social strategy are at risk of falling behind, not being part of the conversation, and at worst, losing clients in the process. In fact two-thirds of HNWIs would consider leaving their wealth management firm if an integrated and consistent client experience across all channels was not provided. To avoid the risk of losing both assets and potentially their best talent, firms need to adopt a transformative mindset that embraces the use of technology to interact with clients and improve the digital experience. Although nothing will replace the personal one-to-one relationship that clients have with their advisor, digital connectivity for access to information and content will continue to grow as the tools for distribution improve.
Early adopters such as RBC Wealth Management understand the importance of having a presence and leveraging digital and social use as an enabler and enhancer to the relationship, not a replacement. In an interview with Maria Bartiromo on Fox Business, John Taft, CEO of RBC Wealth Management had this to say about the importance of digital transformation and disruption.
“….[Digital] is the single biggest transformational area in the wealth management space. Because consumers are telling us that within five years, they expect most of the relationship they have with their financial advisors to be coming through digital channels and mobile applications. Doesn’t mean they are going to move away from advisors, but they are going to expect that advisor relationship to be digitally and social media enhanced.”
As we often share at Hearsay Social, social media is not replacing human capital, it’s enhancing it. Here below are the benefits and challenges of Digitalization for Key Stakeholders (Figure 33, Page 44) from the report.
Although social continues to be a risk and challenge for many firms, the greater risk is doing nothing and being left behind as the industry evolves. Social works, and studies in the U.S. have show that 49% of wealth managers have acquired new clients through social media, of those, 29% brought in $1 million or more in financial assets.
Without a digital strategy, it will be very challenging for firms to attract new talent to support the growing wealth needs of investors under 40 who are leading the way in the use of emerging mobile applications, video, and social channels. Among the under-40 HNWIs, 40% cite social media as important for accessing information, 36% for engaging with wealth managers and firms, and 34% for executing transactions.
Bill Sullivan, Global Head of Market Intelligence at Capgemini Financial Services does a great job of breaking down the findings of global digital growth in the following video.
With the high volume of wealth transfer expected in the next two decades, this is too large of an opportunity for any advisor or firm to ignore. So, get busy living digitally, or get busy dying.
Read the entire Annual Wealth Report at https://www.worldwealthreport.com/