As Dani and Ned continue their discussion with Paolo, the conversation takes a philosophical turn as we learn more about the core needs of humans and why wealth managers have to be conscious of them.
Wealth managers have been fixated on building credentials and sharing this information, but Paolo believes that such methods do not address people’s motivations. He believes that the motivation to invest is a biological one that revolves around purpose and survival. When we invest our money, we do it with a goal and survive in a world governed by economics. However, if our motivation to invest is biological, so is our hesitation to invest. When someone asks us to put out money and invest, our brains send out a warning sign to be cautious.
For this reason, building trust with clients is essential for financial institutions. To support this point, Paolo mentions how Jeff Bezos, the founder of Amazon, noted the importance of trust. Jeff said that for online products, the inability for consumers to interact with the product physically prompted him to find a way to create trust with his customers. He then introduced a rating system where consumers could leave positive or negative reviews of a product, fostering trust in development and, by extension, Amazon. For most products bought on Amazon, customers can return them if they find it is a wrong purchase, but financial products are a lot more complex. Since clients cannot simply send back financial products, the idea of trust is even more important for wealth managers to bear in mind.
Paolo shares that transparency is a significant factor when building trust with clients. Transparency enables clients to comprehend value propositions more clearly and can help institutions develop a competitive advantage. Understanding transparency is even more pressing in our digital age as the prevalence of technology and information has given people the tools to compare the offerings of different companies.
By understanding that trust and transparency are key influences on the biological motivation of people, wealth managers will be better able to provide for their clients. This also includes using the digital to augment and simplify the user experience. However, an important point made by Paolo is that artificial intelligence is not here to replace humans but to enrich the human experience. With this in mind, wealth managers have to first understand the source of human motivation before digitising it. Many fintech try to sell based on ideas of romance, fictionalising the product and attempting to enchant clients using digital technology. While they might provide a digital experience, their digital engagement of clients is lacking. Engagement is essential as it leads to customer retention, but it isn’t easy to digitise, so more studies need to be done to understand people’s needs. Until Fintech providers have a better grasp of the human experience and can digitise engagement, there is still a long road ahead for the industry.