The wealth management industry is one of the least technology-savvy sectors in the financial services industry, according to a report by PricewaterhouseCoopers (PwC).
The study revealed that only a quarter of wealth managers have a digital offering beyond email. Only one in 10 wealth managers make use of social media with clients, while many have only started to invest in web portals and basic mobile apps.
The findings sharply contradict with the expectations of wealth managers’ clients- high net worth individuals (HNWIs).
According to the report, 85% of HNWIs use three or more digital services in their daily lives, with 69% using online/mobile banking and over 40% using online means to review their portfolio or investment markets.
Over half of HNWIs cited that it is important for their wealth manager to have a good digital offering, while 47% of HNWIs not currently using robo-advice services said that would consider the option in the future.
The study also found that two-thirds of wealth relationship managers do not consider robo-advisors a threat to their business and repeatedly insist their clients do not want digital functionality.
PwC global asset and wealth management leader Barry Benjamin said: "This conflict within wealth management firms, combined with a client-base that feels only weak affiliation to its chosen providers, is creating a sector that is now acutely vulnerable, to digital innovation from FinTech incomers, including robo-advice services. Ignoring this state of affairs is not an option. If firms do not respond now, they simply will not survive in the medium to long term."
The study also found that only 39% of HNWIs are likely to recommend their existing wealth manager.
PwC UK wealth management leader Andrew Hogan said: "Wealth relationship managers enjoy high levels of trust among their client base. They are already recipients of a depth and breadth of data and insight spanning both financial and non-financial aspects. Any future wealth management model needs, without question, to retain this human aspect.
"However, in an increasingly complex world where the investment office may, for example, have to evaluate more than 200 different investment products for a client, and where clients are also aware of what automated technology can do in the investment advisory space, technology will be vital to keep the job both do-able and scalable for a growing audience."