Financial professionals have a seemingly endless supply of options for technology. But more options don’t always result in more answers.
How do you choose the right path for your firm’s digital transformation? How does your tech affect your client experience, and why does it matter? And how can you stay ahead when digital transformation is redefining the entire wealth management industry?
There are several common digital transformation trends in wealth management, and they will continue to loom large in 2023. The key is to make them work in your favor.
What is Digital Transformation?
Digital transformation is defined as “the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.”
When we think of it in broad terms, digital transformation has been around for decades – beginning back in the era of turning physical records into digitized records with floppy disks in the 1990s. It evolved with the introduction of the internet, spanning across all industries as dot-coms took over. It’s constantly changing and innovating how businesses operate and interact with their customers. It’s not just about using a computer to run your business; it’s about using technology to create a customer experience.
Digital Transformation for RIAs in the Wealth Management Industry
The wealth management industry is notorious for its slow adoption of digital technology, often adopting new tech incrementally rather than head-on. With increased pressure to deliver a more client-centric experience brought on by the Covid-19 pandemic, advisory firms are catching up.
The Effects of the Covid-19 Pandemic
With a majority of office workers stuck at home during the pandemic, firms were forced to adapt to shifting client expectations – and they didn’t disappoint. Across all industries and sectors, companies accelerated the digitization of their customer interactions, supply-chain processes, and internal operations by 3-4 years.
To put it simply, clients want more from their advisors, so advisors want more from the wealth management industry as a whole – and that’s fueling growth.
Operational Efficiency
One way in which wealth management has lagged behind other industries is in its patchwork tech stacks—what Skience chief product officer Chris Zuczek calls the “frankenstack“. Many firms are implementing new technology to address specific issues without considering how all these different moving parts will work together for their clients.
While many firms continue to question the ROI on improving their customer experience through tech, the statistics offer a compelling counter: 95% of survey respondents indicated that customer experience is “important to their choice of and loyalty to a brand.”
Firms that focus on delivering a positive client experience are seeing average returns 7.4 times higher than those who don’t. Creating a cohesive tech platform allows your advisors to create a smoother experience for clients.
It’s also worth considering that your tech stack could affect your recruiting efforts, as a firm with a more cohesive platform and greater operational efficiency could attract talented candidates.
How Data Brings it All Together
As a tech stack gets built, though, how data flows through those solutions – and how that data can be reported on and leveraged in making business decisions – has to be a primary consideration. Creating a business model based on data can be an asset both internally and externally – improving your firm’s regulatory, operational, and communication processes.
“There are problems, though, and one is that data is not sexy,” says Zuczek. “You don’t see it when you make a sale or when you go to buy something—you don’t look at the data, you look at all the bells and whistles, right? You think about the speed of the car, or how it looked, but not the engine when you bought a new car.
It’s important to have perspective. A strong strategy is great – but it’s nothing without the hard work of execution. One way to make sure your efforts are paying off is to ask your clients and advisors directly. How do they want to be communicated with? What would they like in their interactions?
Creating a Client-centric Experience through Digital Marketing
Nearly 60% of investors switch advisors at least once in their lifetime. If you’ve been on the losing end of that statistic, you should know that it’s probably not just high fees or market performance that drove your clients away – it’s likely your communication with them (or lack thereof).
In the digital-first era of the pandemic, client-advisor relationships are more important than ever. Even if your clients are interacting with you solely through computers or phones, they still want that personalized experience, and they want to hear from you often. So how can you deliver?
“All this technology change enables us to meet those changing client expectations and the rapidly changing regulatory environment that our industry is in,” states Valarie Vest, First Vice President of Strategic Planning & Innovation at Cambridge Investment Research.
One idea: Many RIA firms could benefit from hiring a marketing specialist or even a full-fledged marketing service. When it comes to creating a brand story, keeping your website and socials updated, and communicating with your clients, it’s not the time to DIY.
Effective digital marketing requires constant innovation and the ability to communicate your value proposition immediately. How do you solve your clients’ pain points? The answer should be obvious from the moment they visit your website and at every point after that.
Remember, it’s always easier to retain assets than to get new, so harnessing your tech to create a positive marketing experience for your clients is a must.
Listen to the Experts
Want to hear about digital transformation in wealth management straight from the experts? “Check out Helping Advisors Embrace Innovation and Digital Transformation with Valarie Vest,” a recent episode of Skience’s “CRM Unlocked” podcast series.
When you’re ready to learn more about how Skience can help your firm create a more cohesive digital experience for both your firm and clients, click here to schedule a demo.