In The Digital Age, A Wealth Manager’s Best Sales Tool Is Being Human

The job of finding, serving and distributing individuals’ wealth is less lucrative than it used to be, and it’s reasonable to predict that the current economic situation will not improve the situation. A big part of the problem is the tired and inefficient sales and distribution model that the industry relies on to sell products and services to the mass affluent, a market that is worth close to $10 trillion in the U.S. alone.

Technology can certainly breathe new life into the industry’s sales and distribution setup. In fact, a hybrid approach – half-human, half-machine – has become a kind of shibboleth among wealth managers. But simply ‘going bionic’ is no panacea for lethargy and waste. Technology is only as good as the underlying advisor-client relationship, and the best relationships have the same thing at their core: The client’s financial wellness.

The winners of tomorrow – the wealth advisors who succeed in building highly successful bionic sales and distribution functions – will not be those who stumble serendipitously on some goldilocks recipe of human and machine. They will have held their clients’ financial wellness as their North Star to begin with.

The interests of the mass affluent have taken a backseat in the wealth management industry for decades. The old school business-to-business (B2B) model revolved around distribution shops, who have arrangements with big Wall Street players, pushing plain vanilla products down the pipe to their clients. Firms took out advertisements in the usual journals, sponsored all the right conferences, and pumped out swag such as baseball hats, plushie toys and luggage tags.

Advice, if it existed at all, was horses for courses. Managers simply matched affluent people to certain services and products by their level of wealth. The result is an industry where real, in-depth engagement and highly personalized advice, are rare commodities, with the mass affluent receiving generic investment advice and scant long-term planning, their overall financial wellness in tatters.

It’s worth noting that not all wealth providers have been providing generic advice. The leaders have long been delivering the value proposition of financial wellness; with the top 20% creating goals-based custom plans, but skewed towards the ultra-high-net-worth space.

Regulations as well as the digital age have helped nudge wealth managers towards their main purpose: Their clients’ best interests. Several firms, who saw the appeal of software that works 24 hours a day, seven days a week and doesn’t play golf or drink coffee, took the plunge with technology.

In many cases, their hybrid setups were just a fig leaf for threadbare strategies. Several firms adopted whizzy new technology while slashing front office costs or downsizing workforces, neither of which improved the client experience. Many advisors are still using customer relationship management (CRM) software today to optimize their workflow, such as updating contact information and conversations. They’re spending far less time using the technology to prioritize their day or their client conversations.

In recent years, only a few firms have adopted digital tools that capture and analyze data to generate actionable insights into clients, allowing them to offer truly differentiated banking, lending and investment products, and advice and concierge services that resonate personally. There’s plenty to play for: we have identified untapped opportunity – including non-investable assets like life insurance and pensions, and non-bankable assets such as real estate, family businesses, art and passion assets — of around $142 trillion in potential wealth management assets.

Insurance, in particular, is becoming an increasingly important area for wealth managers as a way to differentiate themselves and provide their clients with more holistic advice and improve their overall financial wellness.

But firms where client financial wellness has long been a secondary or tertiary issue will struggle to build finely tuned hybrid sales and distribution machines that can dispense good advice.

Many firms overlook their most precious commodity: Their sales peoples’ client knowledge. You can see evidence of this in the generic emails sent by marketing departments to clients during the extreme market volatility in March. The net result of such oversights is large swathes of the wealth management industry still pushing the same old products, services and advice.

The wealth winners who prioritize financial wellness will, on a human level, already know that their client has two teenage kids who will shortly attend college, is a Knicks fan and has a huge collection of vintage wines. They will also leverage technology that enhances the human touch with valuable insights and seamless service. For example, they might use Artificial Intelligence (AI) to onboard new clients in minutes, rather than weeks. They could also use algorithms to instantly determine how a new car purchase might impact their clients’ overall financial picture. They can use analytics to assist with cryptocurrency transactions or to reassure jittery clients about the likely length of the downturn.

Accenture and Orbium’s recent wealth management research revealed that, incredibly, wealth managers expect to lose nearly one-third (32%) of their clients’ wealth through intergenerational wealth transfers, which we predict will be US$40 trillion over the next 30 years. This will happen because wealth managers won’t have a personalized and customized approach that appeals to the self-interests of the next generation of wealth.

Whatever the case, a hybrid setup is only valuable if it is geared to a client’s financial wellness, rather than a wealth manager’s self-interest. This is why the future setup of sales and distribution functions in the industry is closely aligned to the future of advice itself. Good wealth management advice is not some airy-fairy, nebulous concept — it can be quantified as a mathematical function of perspective, client engagement and relationship.

And the wealth managers who are set to flourish know that a hybrid approach isn’t enough. They will also move on from making digital experiences personal and start to make personal experiences digital.