Wealth managers: Technology, used right, is your best friend


The digital age has disrupted almost every aspect of our financial lives, whether we use our smartphone to pay for our cappuccino or make our living as a Bitcoin speculator. But some things have stayed the same: Think about the work of wealth managers at a large, full-service firm. They still hunt for high-net-worth individuals and aim to manage every stage of that person’s financial life, whether that is investment advice, long-term financial planning, accounting, tax or preparation for retirement.

Technology won’t make winners out of all advisers, but those who understand the origins of the digital age look well-positioned to thrive. They get the fact that our new technology is not the product of some Big Bang-style moment. Nor is our whizzy new software the brainchild of a single brilliant inventor. They know the digital age is more a story about the development and gradual improvement of technology that offers valuable insights by collecting, storing and analyzing the world’s data mountains. Wealth management, as a data-rich domain, is very much part of that story.

Let’s take the example of acquisition and distribution, the processes by which managers compete for, and retain, wealthy clients. Managers can now expand their pools of client prospects by training artificial intelligence on veritable data goldmines such as the zip codes in anonymized shareholder data. A wealth manager could use a basic algorithm to read, recognize and extract all the zip codes in a 50-mile radius from the proxy voting data of an S&P 500-listed company. This provides them with a huge data set of retail investors. If they combine that data set with other sources of market and credit data, they can start to understand the demographic makeup of these retail shareholders to winnow out the high-net-worth individuals.

Wealth managers can then use predictive analytics technology to tell them what the fresh batch of leads has in common. AI can learn the defining characteristics of high-net-worth baby boomers in a certain county to predict and rank prospects across an entire state or region. This allows managers to devise personalized campaigns to attract clients’ interest while knowing, to put it bluntly, they are not spamming.

The smarter prospecting of clients is one thing, the race to retain them is another. Until technology solves the problem of volatility, firms will face the usual retention challenges during bear markets. But technology can help them fine-tune their communications strategy whatever the weather. Firms can use software that automatically imports fresh leads into their CRM system and develop campaign lists to better target communication. They can also use AI to squeeze insights from the avalanche of data about their clients’ digital engagement preferences, which allows them to tailor the distribution of their content across multiple channels.

Advisers who adopt new technology and cutting-edge communications will also need to wield an acute sense of situational awareness. The intergenerational transfer of wealth, which is already underway, means there will soon be no such thing as a typical high-net-worth individual. The average client is no longer a septuagenarian who steadily accumulated wealth and is now in the early years of retirement: It may also be the 30-year-old recipient of a heaven-sent bonanza.This phenomenon means that managers will need to learn how to identify, win and serve these millennial heirs apparent.

Managers will need a deft hand in terms of technology and communications for this demographic because millennials are not exactly straightforward. Although the stereotype is that millennials are glued to their smartphones, the truth is that they also want a human touch. So, although the onboarding process might involve a face-to-face meeting or a phone call, millennials will expect subsequent communications – market performance updates, tax information and tips, financial education webinars, and macroeconomic and geopolitical information – to be delivered digitally.

To attract and keep this new generation of clients, advisers are going to have to offer a “hybrid” approach – part computer, part human. It would also help if technology and communications were interactive: Remember this is a generation that was weaned on video games. Advisers will also have to juggle this newly wealthy generation along with their traditional clients, the baby boomers, who will continue to demand sophisticated retirement advice.

There is little doubt that technology can be a valuable ally to wealth managers across the entire client lifecycle, especially if implemented in a way that maximizes an adviser’s interaction with their client. But technology is not some all-troubleshooting “god from the machine.” It will be ineffective if wealth managers are not properly tuned into their environment of rampant fee compression, shifting demographics and regulatory churn. In the end, the future survival of wealth managers might come down to something more fundamental: whether they’re properly “switched on.”

Chris Perry is president of

Written by Investors Wallets

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