Almost two-thirds of the world’s high net-worth individuals (HNWI) expect to manage most or all of their wealth relationship digitally in the next five years and would consider leaving their current financial services firms if a digital platform is not provided.
The information, released Wednesday in the 18th annual World Wealth Report, a joint venture between CapGemini Financial Services and Royal Bank of Canada’s (RBC) wealth-management division, is going to be a wake up call for financial services firms who need to adopt a transformative mindset to include the digital offering throughout their client experience, said David Wilson, head of strategic analysis group at Capgemini at a press conference in Toronto. (For more, see: Investment Executive, HNW wealth levels reach another record high: report, June 18, 2014.)
“Regardless of age, wealth level and advice needs, the demand for digital capabilities is high and increasing in the wealth-management sector,” Wilson said. “Individuals are looking to digital capabilities that will keep them informed as well as enable transactions.”
Clients are looking for digital capabilities that would include accessing portfolio information, research data and searching for products and services. Currently, 62% of HNWI are accessing portfolio information while 49% are obtaining financial advice and 62% are executing transactions from a digital platform. As a result, 66% of HNWI say they would leave their firm if they were not able to conduct transactions digitally.
In addition, although many HNWI still prefer to engage in a personal manner with firms for advice — including face-to-face and phone interactions — this is likely to change over time with the rise of the younger generation, adds Wilson.
Although digital demand is highest among HNWI under the age of 40, older HNWI are also demanding, with 57% of those older than 40 saying they would consider leaving their firm if an integrated experience is not provided. That number jumps to 80% of those under the age of 40.
The demand for digital platforms in wealth management will also be increasing, as 57% of HNWI consider most of their current wealth-management relationship to be a digital one; this is expected to jump to 64% of HNWI in the next five years.
“Future leaders will need to act now and not five years from now,” Wilson said.
David Agnew, CEO of RBC’s wealth-management division, which includes RBC’s brokerage division, RBC Dominion Securities Inc., said at the press conference that he has seen a dramatic rise in the number of clients requesting online capabilities over the past two years and, currently, 24% of clients are accessing their accounts online.
“Where will that number be in the future? We hope to get it to 50%, but we have to make sure the clients see a benefit in interacting with their wealth-management firm online,” Agnew said.
These findings are important in that firms needs to start looking at where they stand in their digital offering for clients in, Agnew added.
“It’s important for firms to make it easer for advisors to interact with their clients, whether it’s a mobile strategy or online access for clients,” he noted. “That offering can include a number of things, such as portfolio reviews, market updates, e-newsletters, and account confirmations. The list can go on and on for what can be made accessible online.”