THE FUTURE OF WEALTH MANAGEMENT

Partner insights from

THE FUTURE

OF WEALTH

MANAGEMENT

Empowering financial wellness

through holistic advisor-client

relationships

In wealth management, the transformation from an investment

and transaction focus to a more holistic relationship with

individuals and families has been underway for years. But, the

pandemic has accelerated the need for advisors to adapt quickly

to empower clients to navigate uncertainty.

COVID-19¡¯s economic impact was a wake-up call for many

Americans. A Harris Poll survey found that 88% of U.S. adults

are at least somewhat concerned about their personal financial

situation since the pandemic began. A recent WalletHub survey

found that nearly one in three Americans are worried about job

security. Almost two in three (62%) say that their finances have

taken a hit ¡ª and of those, 80% had felt confident about their

finances before the pandemic.

Presented by

With so much uncertainty, most investors ¡ª mass affluent, high net

worth, etc. ¡ª are feeling an increased sense of urgency to get their

financial houses in order, with a particular focus on health care,

estate planning, elder care, and liquidity matters. Combined with

the challenges of achieving other important financial life goals

(e.g., saving for higher education costs or retirement) is requiring

a higher degree of care from advisors.

Advisors need to

deliver value in

more meaningful

ways while

increasing their use

of digital channels ¡ª

video chat, text,

voice, social media,

email, websites,

and portals ¡ª

to offer memorable

and personalized

experiences.

THE FUTURE OF WEALTH MANAGEMENT

However, even amidst these challenges, individuals and families are

less inclined to be passive bystanders than they have in the past.

Instead, they seek to become empowered explorers and co-creators

of their financial futures with their trusted advisor. Individuals

and families are looking to partner with advisors who deeply

understand their needs, goals, and aspirations, and bring an array of

comprehensive solutions and expertise to the relationship.

A bigger focus on the advisor-client relationship has never been

more important. Advisors need to deliver value in more meaningful

ways while increasing their use of digital channels ¡ª video chat,

text, voice, social media, email, websites, and portals ¡ª to offer

memorable and personalized experiences.

To allay their uncertainty about the market turmoil, individuals

and families are reaching out to engage advisors through digital

communications at a heightened pace:

7-10x increase across all digital channels

4-5x increase in digital research consumption

3-4x increase in client-facing webinars

2-3x increase in virtual client meetings

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¡°Client expectations are

changing rapidly, and they

don¡¯t want to wait. We¡¯re

dealing with one of the

most important things to

But, not all financial institutions are set up to easily communicate

with clients through digital channels. The pandemic exposed

gaps in the digital capabilities of many financial services

institutions. According to a survey conducted by Broadridge

Financial Solutions, Inc., 77% of financial advisors say they have

lost business as a result of not having the appropriate technology

tools to interact with clients.

individuals which is their

finances.¡±

Kristen Kimmel

Head of Advisor Recruiting

and Field Marketing,

RBC

¡°Client expectations are changing rapidly, and they don¡¯t want to

wait,¡± says Kristen Kimmel, Head of Advisor Recruiting and Field

Marketing, RBC. ¡°We¡¯re dealing with one of the most important

things to individuals which is their finances. It¡¯s the real time

access, again getting back to transparency ¡ª at the core of the

trust and the relationship is that transparency where everything

is. The other big piece is aggregation, so we can see the holistic

picture when you¡¯re having a conversation with them.¡±

The need for digital technology is not going away. Providing the

financial advice where clients expect to receive it is imperative

to developing the advisor-client relationship that benefits both.

Accelerating digital transformation is the key to keeping current

clients who are seeking the service they want, while attracting

new clients from competitors who aren¡¯t offering digital solutions.

By 2024, the anticipated traditional face-to-face and phone

interactions will only be 30% of all interactions. The remaining

70% are projected to be through:





THE FUTURE OF WEALTH MANAGEMENT

25%

15%

10%

Apps

Video conferences

Live chat

10%

5%

5%

Website

Email

Webinars

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This paper will examine the effects digital technology is having

on building a successful financial advisor team, opportunities in

the industry, and the strategic framework to build a long-lasting

advisor-client relationship.

THE RACE FOR TALENT

Empowering clients and deepening relationships requires a

strong advisor team ¡ª and talented advisors will be in short

supply. Cerulli predicts that the number of advisors will fall below

300,000 by 2022, from 340,000 in 2007.

To attract and retain top advisor talent, firms will need to lure

these advisors with a strong technology offering. According to

Broadridge, half of financial advisors (51%) report that they often

think of leaving their current firm for one with better technology

tools. Financial advisors under the age of 40 are even more likely to

consider leaving (59%). And a recent J.D. Power Research survey

found that the most significant indicator of satisfaction among

both employee and independent advisors is the perception that

their firm is working to improve its technology.

It is important to note that technology is only part of the

equation; business processes and in-person client engagements

have to be reconstructed to drive value out of technology

investments. This is no easy task. In the words of financial

services research firm, Aite Group: ¡°Global wealth managers had

to quickly sharpen and bolster their client communication and

service efforts while doing business in a socially distant fashion ¡ª

no small task for a traditional advisor-led business model.¡±

In addition, advisory firms will need to maximize productivity

since the pandemic has reduced advisor capacity. This includes

redesigning staffing models and developing advisor skills to

handle increasing servicing and transaction volumes of tasks such

as client onboarding and trade execution.

THE FUTURE OF WEALTH MANAGEMENT

4

¡°Employees in the future are going to have to have skills that

allow them to work more independently and with less direct

interaction than what we have seen in the past,¡± says Luke

Ferraro, Director of Investment Research, The Moneta Group.

¡°This will be the result of management/owners of businesses

weighing the economics of real estate costs against the gains to

company culture and work environment.¡±

INDUSTRY OPPORTUNITIES

While there¡¯s little doubt that the pandemic has been challenging

for advisors, the crisis also provides opportunities for the industry.

Here are just a few:

1. E

 xpand and deepen client relationships

Clients want advisors to address a broader range of their financial

challenges. In addition to basic investment management, they

want help budgeting for healthcare, expense and cash flow

management, estate planning, and managing debt.

2. Explore new compensation models

This is also an opportunity for advisors to reassess and redesign

compensation models to better align with this broader range of

services that encourages partnering across teams, using digital

engagement tools, and being truly connected to the client as an

individual.

3. Accelerate the move to digital

Digital technology and artificial intelligence (AI) will enable

advisors to scale advisory services. Client behavior is changing

to be more tech savvy and they prefer a more personalized

experience. In addition, with the rising volume of data, AI can

enhance advisor productivity. This will allow advisors to spend

more time with clients to build better relationships.

THE FUTURE OF WEALTH MANAGEMENT

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