Humans, by nature, are not rational creatures, especially when money is involved. Regardless of how much we have, there are emotions associated with money that impact everyone. An abundance of product information has been forced onto consumers within the wealth management scene, and they are expected to make a rational decision. However, due to our irrational and emotional nature, making this decision is highly intimidating and stressful. There has been much discussion surrounding consumers’ actions in this landscape of emotions and irrationality, but what about wealth managers? What strategies and solutions can wealth managers take to support their clients better? Our answer lies in the effective use of technology. Let’s look at how strategically utilising technology can result in a comparative advantage for your business.
Using Technology to Demystify Wealth Management
Due to the wide variety of products and services available on the market, diving into the financial planning landscape is intimidating and confusing for consumers. Thankfully, effective use of technology can demystify this landscape, making the process of saving and investing much more accessible.
Instead of overloading consumers with information on investment products, presenting investment to reach a goal is more productive. Goals-based investing is important as everyone has unique life goals, where the emotions of money come into play. By acknowledging clients’ emotions and appealing to them, making investments will appear much less daunting. Technology enables wealth managers to use visuals and charts to display more information about potential clients to invest in that align with their goals. Through digital platforms, wealth managers can highlight the attractive qualities of the company that might resonate with clients. This is especially because investments provide an avenue for consumers to represent and showcase their values. One example would be highlighting specific, relatable matters such as Environmental, Social and Governance (ESG). For consumers who feel strongly for ESG, knowing companies that share the same values will serve as a solid incentive to invest. Hence, digital platforms can be effectively utilised to highlight such details, demystifying the concept of investments.
Beyond highlighting potential companies, digital platforms demystify wealth management by helping consumers develop a trusting relationship with financial institutions. Confidence is critical for investing, and people want their money to be managed by someone they can trust. Through digital platforms, clients can obtain insights into the actions of the company. Ben O’Leary, Co-portfolio manager at Marcus Today and participant of Bambu’s panel discussion, shared that he uses digital platforms to facilitate a trusting and transparent relationship with clients. Marcus Today takes full advantage of these platforms and produces podcasts and webinars for clients to better understand the company’s moves and why. By being transparent and giving clients a look under the hood, they trust the financial institution and will be more likely to invest with you.
Simplifying Through Personalisation
As mentioned, in a landscape of emotions and irrationality, consumers have a tough time navigating this space that is filled to the brim with information, products, and services. In light of this, using digital technology to provide personalised advice and targeted products will make things easier for consumers and result in a competitive advantage for your business.
Personalisation can take the form of investment offerings and financial advice. Anthony Caneva, General Manager of IOOF Holding Ltd, believes that everyone is at their own unique point in their wealth journey and it is essential to start clients off wherever they are in that journey. As they journey towards their goal, digital health check features can track their progress and offer customised advice should they face any hurdles along the way.
While personalisation can be wielded as a comparative advantage, there are certain techniques to bear in mind. On WealthTech Unwrapped episode 18, Oliver Berthier, founder and CEO of Moneythor, shares the power of behavioural science techniques for personalisation. These techniques are accessibility, desirability, and feasibility. Accessibility is essential as customers need to be able to view their personalised data efficiently. Desirability is a quality that is often forgotten, and wealth managers need to remember that the outcome of personalisation has to be positive for the consumer. Finally, for feasibility, the personalised advice given to clients needs to be within their means and achievable for them.
The Onus is on Wealth Managers
More and more, we’re starting to see evidence that digitally active and engaged consumers are more profitable. As shown in this article, when used effectively, technology can demystify and simplify investing. Hence, the onus is on wealth managers to use these digital platforms and provide some sense of clarity and direction in what is otherwise an emotional and irrational landscape of financial planning.