Originally posted on Wealth Briefing (requires registration)


People around the globe are embracing a new digital age. Everything from day-to-day processes to business strategies are being transformed by digitalisation as the world becomes more streamlined and convenient.  This process of digitalisation is something which can be applied to the wealth management industry, as it looks to new technology such as robo-advisors to improve services and reach a wider audience.


We have seen a significant shift in robo-advice, which has gone from being an innovation led by small fintech start-ups, to being adopted by leading financial institutions globally. Far from being hype, the robo-advisory market has become reality in many markets. An increasing number of large institutions across North America, Europe and Asia have launched their own robo-advisory services or made strategic investments to compete with disruptors. Wealth managers who don’t invest in digitalisation will be left behind and potentially lose out on profitability and market share. Worst case scenario they could cease to exist altogether.


A shift in the market

Robo-advisors use automated, algorithm-based systems to provide portfolio management advice. These services are created with customer-centric thinking, where consumers are being placed at the centre of these developments and the technology is developed based on their wants and needs. This opens the market up to new possibilities, as it becomes more accessible to more people, a process which is increasing in popularity for many financial institutions.


Robo-advice is attractive to clients for a number of reasons. Firstly it means lower fees and lower minimum investments on their transactions. Secondly, it means more efficient management of investments. This is because the majority of robo-offerings provide portfolio management using algorithmically-based automated investment solutions that auto-rebalance the asset allocation of the customer’s portfolio, without them needing to take action. Thirdly, it offers more comprehensive advice for less sophisticated investors. Finally, robo-advice offers more transparency on each investment and how they are likely to perform. The digital interface of many robo-advisors makes it easy for the investor to analyse their returns versus benchmark and progress towards goals.


A new age for wealth management

Wealth-tech innovations such as robo-advisors are becoming increasingly popular due to high-net-worth (HNW) clients becoming more digitally savvy, and expecting the same levels of transparency and connectivity offered by retail banks. Younger generations are projected to inherit £1tn of wealth in the next 20 years, with an expectation that services will be digital-ready and work much in the same way as other applications such as Amazon and Google. Services from these providers are seamless and fit into everyday life in an integrated way. As a result, HENRYs (high-earners not rich yet) have increased confidence and great expectations to interact digitally – with a reported 85 per cent of UK millennials saying they are comfortable with Robo-Advice being integrated within their wealth management experience.


Traditionally, wealth managers have relied on the private banker and personal relationships to predict client needs and ensure seamless experiences. Digitalisation does not replace that personal relationship, but enhances it by speeding up the on-boarding process and using customer data to accurately predict what will appeal to that individual’s needs. By removing paper from processes – such as performance reporting, advice provision and asset management – bankers are able to provide more clients with a personalised service which they will come back for, time and time again.


Wealth management for the masses

Robo-advice services, whether new start ups or incumbents, also have the potential to widen the availability of investment advice to the less wealthy. This audience traditionally could not afford financial advice, but are afraid to risk their hard earned savings on the stock market, without a helping hand. This is especially important in this current epoch of near zero interest rates, meaning that cash savings are being eroded by inflation. The challenge when designing robo-advice services for the mass affluent is that the customers may have little or no investment experience, and there is no human advisor there to check that the customer has understood the advice they have received. Well-designed robo-advice services help customers get the right advice for their situation and minimise the risk of them investing in the wrong product. This can best be achieved using an agile, customer experience led, iterative approach that designs and tests different interaction patterns. Whether that be an interactive Web App, Chatbot or combination of multiple technologies, that use language that is right for the persona of customer using the service.


What’s next?

This new form of online wealth management service system is a far cry from traditional financial planning practices. Robo-advisors make automated portfolio management accessible, affordable, and convenient. They can offer highly personalised services that can satisfy each individual client’s needs, preferences and means of interaction, and can be extended beyond the wealthy to appeal to mass affluent market segments as well.


Therefore, wealth management companies should be considering how to best implement robo-advice services and embrace the new opportunities they bring. There will always be investors who prefer human interaction; however an offering which provides this, alongside robo-advice, will thrive in the market. The digital revolution will continue across all industries, and corporations will have to learn how this technology can assist strategically within their business model.

Timothy France-massey

Timothy France-massey

Director of Digitalization


Timothy France-massey is Director of Digitalization at Wipro Digital. Timothy has over 20 years of experience helping financial institutions transform their customer experience and achieve efficiencies by applying the latest digital and cognitive computing best practices.

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