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Hybrid Model for Wealth Management across APAC, Europe & US

BACKGROUND

There has been a lot of talk around the applicability and impact of #roboadvisors in all quarters of the financial services industry. While the viability and profitability of various models can only be determined with time, it is apparent that #digital is already making a dent in this industry. A gradually intensifying shift towards digital, in customer engagement and servicing has been brought into the limelight by these offerings from Schwab, Fidelity, Vanguard and others. There have also been other key developments, which have paved the way for accelerated digital assimilation. Early this year, Singapore based DBS Bank became the first financial institution to announce the deployment of IBM Watson’s cognitive computing and enhanced analytics capability in its #WealthMgmt practice. Secondly, #HNW clients have been registering overwhelming expectations for digital services. Then, #millennials have been learnt to be expecting minimal contact with their advisors, all the while preferring passive fund management. Lastly, although growth of #HNW wealth in the APAC region is anticipated to be twice that of the global average, the advisor-to-client ratio continues to slacken at 1:70, making scalability a challenge.

WHY HYBRID? WHY DIFFERENT?

There is a growing imperative for service providers to aggressively move into the digital space. Now, it’s not a question ofif, but ratherhow. It should, however, be noted that in any established #HNW practice it is unlikely that #digital would uproot the legacy of traditional channels for client engagement. Therefore, a hybrid model that combines the best features of both can be foreseen as the clear successor. However, implementing these should take into account various regional differences.

HNW investors in the APAC region are more self-directed and have a desire to be on top of things. They are largely young, tech-savvy and want to be in the driver’s seat, only expecting their advisors to provide updates on market trends and investment opportunities. The Europeans too have a steadily increasing DIY inclination, but they expect advisors to provide mentorship. The Americans, on the other hand are not too keen on managing their money. Neither do they want to learn more about the ins and outs of investing; in fact, according to a survey they’d much rather help around the house. They want their wealth managers to create investment strategies. The #millennials, however, want in on the decision making but are willing to delegate the day-to-day fund management.

ACCLIMATIZATION

It is becoming clear that tech-enabled advisory solutions would have to be contextualized across regional audiences, namely APAC, Europe and USA. While the medium of digital would be a common denominator, customized digital strategies would have to be created for targeting them. So, distinct information and services would have to be funneled through bespoke channels and packages.

In the APAC, for instance, timely briefs on market trends and investment opportunities that are customized to the client’s plans and aspirations should do well. Here, advanced analytics can be employed for collating crucial insights into personalized information-pellets that enable clients to make investment decisions. Besides, they will also have direct applicability for asset managers in creating allocation strategies. This market should foster digitally heavy practices that facilitate all key functionalities through digital platforms.

European HNWI’s would, however, need regular guidance from their advisors on the means and mechanisms of investing. This would require more interpersonal interaction and a greater time commitment from advisors. Here, digital capabilities will have more prominent use in facilitating knowledge sharing and facilitating interaction between the two parties. Here, the utility of advanced capabilities would be reserved for the wealth managers and the focus of #digital will be on creating seamless learning experiences with direct applicability.

The US market would require personalized digital platforms that simplify asset allocation and allow client involvement in key decisions. Here, a low threshold design would be key for getting reluctant HNW clients involved. Add-on capabilities, such as enhanced social interaction that nurtures client communities, would be important to retain clients. Among #wealth practices in the US, a digital allocation to create engaging experiences is expected.

With the concept of HNW itself needing possible review, it remains to be seen to what extent exclusivity would be factor in these services.

Date: May 12 2015

ABSTRACTED SUMMARY

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