In-person and digital wealth management interdependence

In-person and digital wealth management interdependence

The popularity of online solutions is rapidly growing among investors and continues to do so. To remain relevant, investment advisors need to adapt and embrace the benefits that online financial services offer to them, their businesses, and their clients. Here are some key facts about what’s on the horizon and what advisors need to know.

According to the Canadian Bankers Association, 90% of Canadians believe that technology has made banking far more convenient. Investors particularly appreciate the flexibility that technology brings them and feel that it saves them time and money. It comes as no surprise then that investors use online solutions when managing their assets.

The trend is even more striking for the next generation. A recent Gallup study on banking shows that 92% of millennials are most likely to use online banking.

Like many other industries, wealth management has experienced a drastic shift in client expectations due to digitalization. Given this context, it’s essential for wealth managers to understand a few key facts.

How have investor expectations changed and how will they change in the future?

How can investors adapt to this new environment?

Ultimately, how can advisors deliver best-in-class financial services in an increasingly online world?

By tackling these questions, financial advisors will learn how to capitalize on this trend to grow their client base, improve client satisfaction, stay relevant, and stay ahead of the competition.

Capitalize on optimized wealth management

Research predicts a huge transfer of wealth in the Western world over the next decade. In Canada alone, an estimated 1 trillion dollars will be transferred in inheritance between generations.

Taking advantage of this transfer should be a top priority for financial advisors. It’s an opportunity to extend their services to the family members of retired and soon-to-retire clients. However, studies suggest that the vast majority of heirs do not plan to use their parents’ advisor, according to Forbes.

How can financial advising firms navigate such a massive migration? The answer may well lie in financial technologies.

FinTechs are among the best solutions to optimize a firm’s offerings. This includes those that facilitate online financial advice to a new generation of investors. These tools help advisors remain relevant amid growing competition. It also enables them to expand their services and streamline their business, all the while cutting costs.

Should digital transformation in wealth management be end-to-end?

In this context, it’s apparent that wealth management companies should use online services to keep current clients and gain new ones.

But focusing exclusively on the online experience may put them at a distinct disadvantage. Indeed, online platforms have recently seen a significant increase in popularity, partly due to the coronavirus pandemic. But people’s preference for online versus in-person services remains relatively marginal.

In fact, McKinsey reports that 75% of people may be willing to use online banking and wealth management. Meanwhile only 30-35% indicate a marked preference for online services over in-person services. In comparison, about the same number of people (28%) still prefer dealing with a real person. Interestingly, only 15% of financial institution accounts are opened via online channels.

Another revealing aspect is investors’ attitudes towards robo-advice. According to a study by the UK’s Financial Conduct Authority, the algorithms can indeed help clients make better financial decisions. However, the study shows that around 25% of investors reject free robo-advice. Concerns ranging from data security to the actual quality of the guidance were the primary reasons people went against these investment advice.

These figures underline that face-to-face interaction remains essential in wealth management and that online platforms should be used in tandem with in-person services. Online solutions will continue to grow as the next tech-savvy generation looks for financial advice, but face-to-face services will remain vitally important.

In view of these facts, it is clear that clients want more personalized service offerings.

What do people want from their investment advisor?

Many firms today offer innovative products and solutions based on the interdependence of algorithms and human advisors. These allyships between financial advisors and online wealth management tools have shown to be highly profitable. They provide better service to clients while taking over some of a financial advisor’s more burdensome tasks.

Ultimately, this benefits clients and advisors alike, helping to maximize time and efficiency while optimizing customer satisfaction.

These hybrid models are by no means the exception. In Canada, investment and money management firms have already started rolling out hybrid models for advising. Some firms proudly promise “easy-to-use online tools” combined with “real-time advice from real people” as their value proposition.

Similarly, some financial service providers adopt a hybrid approach, combining AI and algorithms to offer services to clients. An online platform assesses users’ financial decisions using five criteria and provides feedback. This solution supplements traditional in-person advising for addressing complex topics concerning clients’ financial health.

How can digital finance benefit portfolio managers?

A hybrid model is ideal for maximizing delivery channels and increasing client involvement while optimizing a management firm’s overall performance.

Online options can be provided on an as-needed basis and offer 24/7 wealth management support for investors who need it. Offering a virtual-advising service option also reduces an advisor’s workload. Therefore, it enables them to focus on increasing their customer base and expand the number of assets under management.

While reserving online services for more minor issues, advisors have more time to provide more customized in-person services, offer more holistic services, and develop and maintain client relationships. They can also afford to offer preferred client services to important investors.

Managing client expectations during in-person experience

In the wealth management industry, performance is important, but the client experience should not be overlooked. Building trust and a positive relationship with investors moves you from being a service provider to being a long-term business partner.

In this interview with the author, speaker, columnist and client experience expert Daniel Lafrenière, learn the 100 commandments to achieve this.

  • Minimize client’s efforts
  • Understand your client
  • Be proactive when communicating with your client
  • Be polite and empathetic
  • Be reassuring when managing their expectations
  • Foresee their needs when setting goals
  • Don’t let them down
  • Be transparent
  • Inspire trust and avoid conflicts of interest
  • Pleasantly surprise them

Learn more here.


Experience it yourself, see the difference