How digital advisory is changing the future of wealth management

Digitization has changed your everyday behavior drastically. Just think back and remember when was the last time you physically visited a bank or stood in a queue to buy a ticket.

Wealth management (WM) services cannot remain immune to the changing dynamics across the industries. Challenges like increased client expectations, fast-changing business models, and uncertainty have pushed wealth advisors to develop their digital capabilities.

As per a report, globally, millennials account for approximately 23% of the world population and 1.8 billion people. In India, this number is 440 million and 34% of the country’s total population. This digital-savvy generation needs tech-savvy advisors who can help them fulfill their financial goals.

Digital advisory and its role in wealth management?

The internet has been a great equalizer of sorts. Digital advisory not only democratizes wealth management but also makes it personalized. Thanks to digital tools, you (investor) have access to a wide range of investment and saving products like stocks, ETFs, digital assets, and so on.

You can choose your allocations and have a personalized portfolio depending on your financial goals. Digital wealth management uses technology to offer solutions that provide greater value and a customized investment plan.

Financial advisors with access to digital tools create seamless investor experiences across various devices and platforms. Digital advisory helps them reach more customers and scale solutions.

Why is digital advisory the future of wealth management?

Digital advisory removes high barriers associated with traditional wealth management and benefits both the customer and the advisors.

Advantages to the investor are as follows:

  • Better insight into customer’s requirements

Traditional advisory models offer investment plans based on your risk appetite or a few questionnaires you fill. When you approach a wealth advisor, they offer you a solution based on their limited knowledge and what they understand about your requirements.

The biases of the advisor and their bent for certain products may also influence their advice. Digital advisors use technology and data to understand your financial goals and requirements and offer you data-driven solutions.

  • Dynamic portfolio management.

With digital advisors, you can have dynamic portfolios that change with life-stage and also your financial goals. You can also get services like portfolio rebalancing and tax-loss harvesting, opt for personalized budgets, and automated transactions for investing.

Digital tools also help you stay on top of your investments at all times. You can scan your portfolio better and make course corrections as and when required.

  • Flexibility.

Digital wealth management allows you flexibility in your approach, depending on your comfort in tracking markets and also the time available at hand.

You could rely on the portfolio recommendations based on algorithms that reduce the stress of watching the needs, or you can pick your investments and track them actively.

  • Convenience.

Digital platforms allow you to manage your portfolio at a time and place per your convenience. Due to the current pandemic, you might want to avoid any physical interaction.

Application Programming Interfaces (APIs) ensure that you can track and control your finances without stepping out of your home. The digital interface gives you the flexibility to manage your investments at any time.

Advantages to the advisory firm are as follows:

  • Improved efficiency.

Advisors can go through information faster with artificial intelligence (AI) and machine learning (ML). Processes like client communications, background checks, and document verification take less time, which frees up a lot of time for the advisors.

They also have access to more credible, error-free, and in-depth information, which allows them to offer more personalized and accurate advice. Digital wealth management also opens up options to focus on more value-creating activities and analytics-driven better insight and decision-making across the organization.

  • Better client engagement.

Digital advisory offers customers services on their terms. Tailored investment plans, seamless experience at reduced fees result in satisfied clients.

  • Better data storage and security.

Financial institutions have a lot of sensitive data and volumes of paperwork to store and safeguard. Digitization enhances the security of this data, and retrieval and storage are faster and easier. Automation also helps in the maintenance, archiving, and destruction of the data as and when required.

What about the human touch?

Some of you may wonder if digital wealth management will remove the human touch altogether?

You may be ordering food on various apps, but does that mean you cannot go to a restaurant and eat? Both options co-exist and complement each other. The same applies to digital advisory as well.

Digital wealth management can help those who had no access to these services due to the entry barrier in the past. It also gives you more freedom to manage and track your finances.

A combination of digital advisory and the human touch enables better personalization and better client engagement. A hybrid approach will drive innovations and also improve efficiency and customer experience.

Final Words

You can see the influence of digitization on all spheres of life all around you.  Wealth management is also going to witness the positive impacts of innovative technology. Thanks to digital wealth management, you can match your financial goals to the right portfolio with a smartphone or a laptop in your hand.

Related Articles

Back to top button