Wealth management is undergoing continuous change, driven mostly by technology and demographics. One of the biggest changes currently disrupting the business is the advent of wealth management applications, which are being adopted by younger clients, while at the same time that older generations are fading out of the wealth-generation game, drawing down their assets in retirement and following, for the most part, ultra-conservative investment strategies.
While demographics play a major role, the biggest factor in the widespread adoption of wealth management applications is the tremendous utility they offer to clients. Customers can now use a single application to automatically review all of their financial accounts, from stock investments to credit cards and checking or current accounts. These wealth management applications help make personal finance dramatically easier, delivering strong value while making older business models obsolete.
However, apps that are used to make budgeting and saving far easier only scratch the surface of what these new technologies are capable of delivering to customers. In fact, we are on the cusp of what may turn out to be the largest revolution in the history of the financial advisory and wealth management industries, with the role of human advisors shifting briskly towards high-level custom applications created to optimise financial operations.
Today, a sea of change is modifying the way people interact with financial institutions, as well as how they approach establishing, and making moves towards, their financial goals.
Since mobile devices are portable and reachable anytime and anywhere, users are not only comfortable with carrying out the majority of their financial dealings through their phones, it turns out that the majority of people actually prefer it.
As just one example, it has been estimated that more than 41% of current wealth management customers in the European Union today prefer exclusively using their mobile devices to access their financial accounts. And, these mobile-savvy users already have raised the bar considerably in terms of what expectations they have as customers.
The demographic shift towards younger, mobile-savvy users is guaranteed to drive major changes across the financial sector, particularly where inefficiencies from the old walk-in or telephone-based service models still linger.
Global consultancy firm Deloitte has identified a number of key changes that will take place as a direct result of customers demanding more when it comes to financial services. These include:
As the financial services industry transforms into one where its employees will be engaged in purely high-level, value-additive tasks, the demands of financial advisory jobs will shift in step. This is one reason why today’s financial planners and advisors must familiarise themselves with the gamut of financial portfolio management apps, in order to master all of the pieces on the chessboard upon which they will be helping their clients strategically move towards success.
For some financial advisors who have been in the business for decades, the full capacity of emerging customer-facing apps in the wealth investment management and insurance business may appear ominous. While it may be true that the incredible breadth and scope of these tools is likely to reduce the total demand for financial advisors, it is equally true that those who fully learn to harness the power of these tools, guiding their clients in a direction that will help them reach their financial goals, stand to benefit immensely from their advent.
Just as clients vary in their sophistication, from those who have never read a word of the financial press, all the way up to high-net-worth accredited investors, the apps for wealth investment management and insurance range from simple to highly complex professional trading platforms.
Personal finance apps
One striking feature of today’s wealth management scene is the existence of mobile-based tools that are extremely simple to use and completely replace a large portion of the tasks many people once turned to professional advisors for help with. Most of these fall under the realm of personal finance, with features that quickly and easily help clients sort out their personal finances with just a couple of clicks.
Apps like Acorn allow clients to automatically invest money in set asset classes at set intervals, or with any surplus funds that arise. Other apps that make wealth investment management and insurance much easier include platforms like Mint, which allows customers to achieve a holistic view of their finances by linking all of their accounts into one centralised location.
Rather than run down the near-infinite list of such wealth investment management and insurance apps, it is easier to take a 5,000-foot survey of their most common service offerings. The features that are now just a click away for today’s wealth management clients include:
Generally speaking, apps, robo advisors, algorithmic trading and the internet itself are replacing the mundane tasks that financial advisors once performed. Things like executing single trades, or even balancing one’s portfolio, will increasingly be easily handled by customers themselves, who make use of wealth management software solutions.
But there is still an important role for financial advisors to play. Applying these applications in their businesses will help their clients use wealth management software solutions in a way that maximises their chances of reaching concrete personal financial goals. Financial advisors will play a critical role in helping clients establish exactly what their long-term financial goals are, especially in a world of ever-increasing complexity, confusion and risk.
Merrill Lynch is one example of a financial advisory firm that has taken a proactive approach to wealth management planning. The company has ordered its own custom wealth management planning software that complements the functions of its advisors. This helps Merrill Lynch customers get the best possible experience, while freeing up advisors to concentrate on the most value-additive tasks, like helping customers establish key long-term financial objectives, and then devising strategies that will best deliver the desired results.
The Merrill App gives users access to a plethora of financial services. These include:
Merrill also offers its clients the Merrill Edge trading platform. This is a far more sophisticated package that delivers state-of-the-art trading options and technical analytics to those who actively manage their market portfolios.
While some in the financial advisory business have been slow to adopt any kind of wealth management planning software, others have fully embraced the trend towards technology. Many firms within the industry have been spearheading the development of wealth management planning software tools by designing their own custom apps, which are turning out to be compelling value propositions for discerning clients.
A wealth management application is a necessary tool for companies that want to provide their customers with a full range of financial services while spending a minimum amount of their own, and the client’s, time.
Some recent studies have concluded that more than 50% of the global population is banking primarily through their mobile devices - this trend is poised to continue into the future. Clearly, any financial business, advisory firms included, should be carefully considering how to harness these trends in a way that will create the most value for clients. This should be viewed not as an obstacle, but as an exciting and challenging opportunity.
Those who are able to incorporate wealth management software solutions into their business will be in a position to oust their competition, while helping define the future of the financial advisory industry in the process.