These are hard times for investors. Many are adrift, uncertain about where to put their money and who to trust. They need sound advice as never before, but they have been badly burned in the last four years, and their patience and trust have worn thin.
If being an investor in this climate is challenging, so too is operating a wealth management firm. The market is unusually fluid at the moment, making the competitive positions of long-entrenched firms less secure. Investors are more willing to test new relationships, and therefore this is an ideal time to exploit rivals’ vulnerabilities and peel away clients.
It’s also a good time for wealth management firms to distinguish themselves by using emerging technologies to enhance the client experience. Many firms struggling with top-line revenue growth and increased regulatory costs will under-invest in this critical capability. That could be a grave long-term error.
New information technologies that have been slowly developing (for example, tablet computers with rich interfaces and new displays, online tools that can help firms gain client insights from a trove of unstructured data, powerful 4G networks, and public and private clouds) have reached a tipping point, allowing firms to run their operations and engage with clients in innovative and more efficient ways. It’s possible to envision a future in which the client’s connection with the firm is fast, always on, and full-service through multiple channels; and where these interactions — with advisors and also with peers via social media — are collaborative and secure. A few wealth management firms will assemble these capabilities into vibrant systems, geared toward solving real customer problems, and transforming the client–advisor relationship. In time, those who are served well by wealth management firms could go on to start other businesses, and thus a highly capable wealth management company could become, in itself, an engine of growth for every sector in the economy.