The deep dive: Wealth managers struggle to meet clients’ technology demands

By Puja Sharma

The deep dive’ is our bi-weekly exploration of a relevant topic, hot trend, or new product. For Prime subscribers only.

How does it work?

New research reveals investors would consider switching from a wealth manager that doesn’t modernise and embrace new technology. Clients trust wealth managers who can effectively incorporate technology into their service, especially for portfolio management and client meetings. Despite this, wealth managers often do not to use their investment advisory tools with clients, stating that these tools are not suited to clients’ needs and too confusing

A quarter (25%) of investors globally would consider switching from wealth managers that fail to modernise and embrace new technology, according to Avaloq, a digital banking solution provider and wealth management technology. The new research, conducted among over 3000 investors and 300 wealth managers across Europe, Asia and the Middle East, found that wealth management professionals are reluctant or unable to use investment advisory tools with clients.

Avaloq found that a willingness to embrace technology was a key driver of client trust in their wealth manager, with two-thirds of investors (66%) reporting that being able to see investment analytics and portfolio visualisation was crucial to building trust with their adviser and 63% noting the value of being shown the impact of their investment decisions on their portfolio live in meetings.

Who is under the radar?

Despite this, Avaloq found that wealth managers have little confidence in their technology systems, with 44% of those surveyed describing their systems as outdated and nearly a third (31%) stating that their systems are not suited to their needs.

This dissatisfaction is preventing many wealth managers from meeting their clients’ expectations, with 37% globally still not using investment advisory technology live in client meetings. Key reasons include the user interface not being optimised for client presentations (78%) and the systems being too confusing for clients (65%). Other barriers include an inability to hide sensitive information (40%) and systems being difficult to navigate (39%).

This disparity between investors and their advisers is even more striking when looking at the UK alone. For investors in the UK, technology plays a bigger role when it comes to establishing trust in their wealth manager. 72% of UK investors note the importance of being able to see investment analytics and portfolio visualisation and being shown the impact of their investment decisions on their portfolio live in meetings. Yet, half of UK wealth managers (50%) currently do not to use investment advisory technology with clients – once again due to the design not being optimised for client use (78%) and applications being too difficult to navigate (61%).

A particular tech pain point highlighted by wealth managers in the UK is a lack of integration between their various systems. Avaloq’s research shows that 57% of UK wealth management professionals feel their systems are not well integrated, versus 45% globally, and 63% say that their data is seamlessly integrated across all the systems they use, compared to 58% globally. This lack of integration can result in additional manual processing, which can further hinder wealth managers from scaling their personalised service.

Why does it matter now?

Suman Rao, UK Managing Director at Avaloq said: “Our research reveals that while wealth managers are under increasing pressure from clients to incorporate technology into their offering, many are struggling to keep up due to complex, outdated and poorly integrated technology systems.

Despite this, their reliance on technology is growing by the day, and demand from clients is only going to increase. If wealth managers want to remain competitive and ensure they are delivering top client service, they must have a well-functioning technology ecosystem.

“That said, the responsibility is not all on the wealth manager, technology providers must also step up to ensure they are delivering the analytics, automation and visualisation needed by both wealth managers and their clients.”