HELPFUL INVESTMENT TECHNOLOGIES – HNW RESEARCH
HNW RESEARCH: WEALTH MANAGEMENT INDUSTRY AT TECHNOLOGY TIPPING POINT
Under half world’s wealthy feel investment technologies used by financial providers meet their needs
LONDON– New research released by SEI (NASDAQ: SEIC), Standard Chartered Private Bank and Scorpio Partnership shows that only 49% of the world’s wealthy feel the investment technologies used by their wealth manager are appropriate to their needs. In particular, clients feel their wealth manager’s technology lets them down in the ‘discovery phase’, with only 40% of the Futurewealthy stating their provider’s technology helps to show them how to invest their money.
These findings are drawn from the third paper in the Futurewealth 2012-2013 series, entitled Helpful Investment Technologies. The insight, which isbased on the views of 3,477 of the world’s high-net-worth population with an average worth of USD1.9 million, also highlights significant differences in attitude when it comes to different client segments.
Respondents worth over USD4 million appear to be better catered for, but even among this elite group only 59% say that they are satisfied with their wealth manager’s technology. Meanwhile, only 45% of those worth under USD500,000 agree that their providers are really delivering when it comes to technology.
There are also strong regional disparities. Wealth managers in the American markets are more technologically adept. 69% of respondents in this region feel that provider technologies had suitable trading capabilities and 58% agree that it gives them an aggregated view of their financial picture. By contrast, the Futurewealthy of the European and Asian markets are significantly less satisfied. Only 42% of respondents in Asia agree that their provider’s technology adequately demonstrates portfolio strategies. In Europe, this figure plummets to 29%.
Where wealth managers are hitting the mark is when it comes to delivering solutions that are safe and practical. But looking to the future, clients want these technologies to be more intelligent and high quality and their wealth managers to use them more innovatively.
“Integrating technology into their core service offerings will help wealth managers better satisfy the demands of their clients and prospects,” said Joseph P. Ujobai, Executive Vice President of SEI. “The biggest impact of technology integration to date has been behind the scenes, in the middle and back office, where enhancements simplify the ease of transactions and minimize operational overhead. But investors want to experience these technology advancements themselves, and wealth managers need to prioritize giving investors digital access to the decision-making processes that inform managers’ suggested strategies. Wealth managers who use digital technology to pull investors into this discovery phase will stand out among competitors.”
- Advisor selection
The research also indicates the high level of influence that digital channels have within the advisor selection process. When deciding to work with a financial provider, ratings, reviews, search engines and comparison sites all feature strongly in the matrix used to assess how to invest and with whom.
Those in the higher worth segments are the most likely to look to digital channels to validate their investment decisions. In fact, those worth over USD4 million place about three times as much importance on their wealth manager’s blog posts and social media presence compared to those with less than USD500,000. Equally, Asia’s wealthy are more likely to research online before finalising their advisor selection.
“With the proliferation of mobiles and the smartphone, it comes as no surprise that the way clients consume information and interact with banks has changed. This study reveals that while the private banking industry is making some inroads in leveraging technology through online execution, it falls short in adding value in the advisory space. Technology provides us with the opportunity to develop deeper relationships with our clients, and private banks that are able to harness technology appropriately and make each communication meaningful, relevant and helpful can look forward to growing with their clients in a highly competitive landscape”, commented Shayne Nelson, CEO of Standard Chartered Private Bank.
- Digital channels
According to the Futurewealthy, some financial providers are doing better than others when it comes to using online channels. However, with an average performance score of 56 points out of 100, there is still clearly room for improvement. Wealth advisors come top of the class, outstripping private banks by 7 performance points and banks by 11 points.
In the previous two Futurewealth papers, the research identified that those on the fast track to wealth creation have a strong interest in emerging technology. This has become the yardstick against which they measure their financial providers.
In fact, when it comes to staying in touch with their wealth managers, they have an armoury of digital devices. Laptops are the most widely used communication device but smartphones, iPads and Blackberry also play a significant supporting role, with well over 40% of respondents ascribing importance to these devices in their financial relationship.
The findings demonstrate that it is the wealthiest of the group that have the greatest demand for these portable solutions. 74% of those worth over USD4 million already use the mobile and tablet applications offered by their wealth managers versus just 35% of those with current wealth of under USD500,000. Likewise, 64% of Asia’s wealthy are using the financial apps of their providers, more than double the uptake from the Western continents.
“These findings demonstrate that it is no longer just about the quality of information that these clients receive but about a flow of data that fits around their busy lives” commented Cath Tillotson, Managing Partner of Scorpio Partnership. “The Futurewealthy exhibit a strong tendency towards using digital solutions and are pressing their financial providers to meet the technology challenge with commitment and creativity.”
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- In total, 3,477 individuals took part in this fourth global poll of the Futurewealthy. The average level of wealth among these individuals was USD1.9 million.
- Geographically, 46% of the sample group live in Asia Pacific, 25.6% live in the Americas, 27.1% live in Europe and 1.3% live in other countries around the world. 65.3% are employees and 17.9% are business owners.
- The research covered four topics, the second of which has been included in this paper:
- The digital habits of the Futurewealthy
- Communication habits
- Helpful investment technologies
- Digital marketing
- The research was conducted using an online survey. Participants were identified using profiling techniques to determine their likelihood of qualifying as Futurewealthy candidates. They were contacted directly by email.
- The research was conducted by Scorpio Partnership in collaboration with Standard Chartered Private Bank, and SEI.
- Scorpio Partnership is a pioneer in the art of translating the complex needs of wealthy clients into practical, innovative and profitable solutions to target these customers. This award-winning firm has interviewed almost 10,000 millionaires and billionaires worldwide to collect opinions on what they will need next. With this knowledge, the firm has implemented strategic research, practical consulting and business innovation projects in over 35 countries.
- Standard Chartered Private Bank is the private banking division of Standard Chartered. Headquartered in Singapore, the Private Bank provides exciting career opportunities to over 1,200 employees including around 470 relationship managers globally. It has 22 offices including two trust offices across Asia, Africa, Middle East and Europe.
- The Private Bank has grown strongly since its inception in May 2007. On top of its strong organic growth, it acquired American Express Bank in 2008, through which it has further improved its capabilities.
- The Private Bank leverages the natural strengths of Standard Chartered: A heritage of over 150 years in international banking, an international network across more than 70 countries, and strong local presence in growth markets. This puts the Private Bank in an advantaged position to build and deepen the relationship with its clients.
- Standard Chartered Private Bank’s strong growth and rising industry leadership has been recognised by the industry: major awards that the Private Bank has won include the “Best Global Private Bank” award at the Wealth Management Awards 2011 organised by The Financial Times and Investors Chronicle; “The Best Private Bank in Asia” and “The Best Private Bank in India” awards by The Banker in 2011; and the “Outstanding Private Bank in Asia Pacific” award at the annual Private Banker International Global Awards 2012, which the Private Bank has won four times.
- Standard Chartered Bank is incorporated in England and Wales with limited liability by Royal Charter 1853, Reference number ZC 18. The Principal Office of the Company is situated in England at 1 Aldermanbury Square London EC2V 7SB. Standard Chartered Bank is authorised and regulated by the Financial Services Authority under FSA register number 114276 VAT number: GB 244106593.
- SEI (NASDAQ:SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $458 billion in mutual fund and pooled or separately managed assets, including $201 billion in assets under management and $257 billion in client assets under administration. For more information, visit www.seic.com.