In race to digital transformation, wealth managers need to catch up

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The wealth management industry got off to a slow start in the digital transformation race. In its 2022 Digital Transformation and Next-Gen Tech Study, Broadridge ranked financial services firms by their progress on digital transformation. Only 13% of wealth managers placed in the most advanced category of digital transformation leaders, compared to 41% of investment and asset managers and 40% of universal banks.

Those are troubling results at a time when digital channels are beginning to define the customer experience for virtually all businesses. The good news for wealth managers is that there is still time to catch up — but only if they act now by committing themselves to remaking their firms with technology, and funding the investments needed to pull it off.

As consumers pay more attention to companies’ digital services, they’re less than impressed with what they are seeing from wealth managers. According to another 2022 Broadridge study of more than 3,000 consumers, only [12%] of consumers rank wealth managers highly for overall customer experience. By contrast, [56%] of respondents say their banks provide a top-quality customer experience.


The digital stakes will only increase from here. Many consumers made the switch to digital channels because they were forced to by pandemic restrictions. Now that they’ve experienced the convenience of digital service, most won’t be going back. Nearly 60% of consumers say the pandemic fundamentally and permanently changed how they communicate with companies.

That change in behavior is occurring not just among young investors or “digital natives,” but among all wealth management clients. Most wealth managers understand that capturing the business of Gen Z and younger millennials will require significant technology upgrades. What some firms miss is that demand for digital services actually correlates highly with net worth. The bigger the account, the more likely the client is to expect sophisticated digital capabilities.

Clients gravitate to providers with superior digital platforms even when they can’t see the technology itself. Personalized service has become an essential component of a high-quality customer experience. Among financial service firms ranked as digital transformation leaders, 55% said personalization was the most important thing to customers when it comes to the communications they receive.

That type of customized communication and advice can only be delivered through digital applications. AI, centralized data and behavioral science are key enablers in delivering highly personalized services which really demonstrate that the firm and the adviser truly understand the investor.

Wealth managers have some work to do to achieve that level of personalization. Only 13% of wealth firms are at the “advanced” stage of delivering micropersonalized marketing.

Wealth managers also need to up their technology game to keep up with clients’ growing appetite for cryptocurrencies and other emerging digital assets such as alternative investments. Two-thirds of the financial advisers participating Broadridge’s 2021 adviser survey say their clients have asked about crypto exposure. But many advisers feel unprepared even to recommend crypto to their clients, never mind actually providing access to crypto investments. Delivering digital assets — or even responsibly advising on them — will require a more sophisticated digital technology foundation. 


These examples show how digital capabilities are driving the customer experience in wealth management. In so doing, they are helping digital leaders increase customer retention and growth rates. At the same time, digital tools are transforming the wealth management business on the back end.

Analytics, process automation, artificial intelligence and other digital applications are helping advisers streamline operations, enhance adviser productivity, lower costs and expand margins. Among Broadridge digital transformation leaders, 71% say digital transformation efforts have already increased revenue, and 51% have experienced improved profitability.

On their own, these potential benefits should make catching up in the digital transformation race a top priority for wealth managers. But in addition to boosting revenue growth and expanding margins, digital transformation promises another key strategic advantage for wealth management firms: It will help them recruit next generation of advisers. Demand for innovative digital tools isn’t limited to investors and consumers. Wealth managers who commit to digital transformation will gain an important edge in attracting the young, talented professionals needed to compete in the new digital era.

Mike Alexander is president of wealth at Broadridge Financial Solutions Inc.

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