As we are sure you’re aware, consumers have become increasingly connected and data-driven. They use the Internet to research and buy products and services, and their use of social media is disrupting patterns of loyalty, creating new forms of commercial communities and recreating the purchasing process.
Companies can no longer focus on the “where” and the “who” of selling. They are unable to continue only targeting “emerging markets” or certain demographic groups. Instead, they must pay new attention to the “how” and the “why” of consumption. The always-on, networked consumer is the new “how”, and the independent, cooperative and socially conscientious consumer is the “why”.
It is, therefore, imperative that companies invest in capabilities that help them better understand and act on these changes. That includes embracing advanced analytic tools that interpret rapidly changing data and assist in identifying opportunities.
Businesses should also consider adopting more agile business models and partnerships to improve their strategic and operational responsiveness. These steps can help them, for example, to deliver more tailored services and to shift from traditional products to the more experiential offerings that consumers expect today.
We are in a moment of unprecedented experimentation. Consumers are far more open to test-driving new brands, products, and experiences today (and the phenomenon is global.) This context is redefining how consumers trust brands. With near-infinite access to resources, consumers no longer rely on centralised institutions for direction.
Moreover, consumers are willing to try almost anything when their networks are also experimenting and when a brand’s reputation stays intact. This means that a brand’s illustrious history is less critical to cultivating consumer trust than its ability to feel personal. But a willingness to experiment can all too quickly morph into a state of mindless distraction where messages don’t register with consumers and the barrier for creating powerful emotional memories rises.
Companies that bank on consumers’ “almost infinite appetite for distractions” (credit to Aldous Huxley) are only successful when they also offer the remedy of product curation that eases consumer decision stress. This is the modern tug of war between consumers’ pursuit of novelty and craving for familiarity.
FINANCIAL SERVICES + WEALTH MANAGEMENT
The wealth management industry is in the midst of significant change. As the industry is re-shaped, one positive outcome will be that more people will have access to a greater quantity and quality of investment strategies and advice that was traditionally reserved for high net worth individuals. Two drivers that will accelerate this democratisation of wealth management are a shift in investor preferences and advances in technology.
The younger generation of investors typically likes digital solutions, demands convenience and desires transparency and control over their finances. Those preferences are also increasingly shared by other demographic groups. The user experience they desire is shaped by their experiences with companies such as Apple, Facebook, Google, and Amazon. The result is a growing need for wealth management offerings that deliver tailored investment advice, are accessible through multiple channels, allow for social/peer input, and are intuitive to use.
Technology has already disrupted and transformed industries such as transportation, travel and many others. It has already had an impact on wealth management and will continue to transform it. Access to more data, the ability to quickly convert that information into useful models and algorithms, and applying that intelligence to decision making enables science to play a more significant role in investing.
By using technology to simplify asset allocation, facilitate exchange-traded funds (ETF) or mutual fund research and selection, and deliver other common investment activities, costs can be reduced and services made more affordable.
Another significant trend is that as smartphones and tablets become ubiquitous, clients expect to be able to monitor their portfolio, undertake research, transact and get advice – all in real time and on-the-go.
The demand for mobile app services is so acute that 80% of high net worth individuals under 40 years of age indicated they would leave their wealth management firm if it fails to provide an integrated-channel experience. It’s clear that modern technology allows for fiduciary advice to be delivered affordably, at scale, in real-time and with exceptional client experience.
Companies such as Wealthfront, WealthSimple, Nutmeg, and Betterment have successfully raised millions of dollars and used that funding to take their technology-driven solutions to market and rapidly build significant asset bases. Traditional players such as Schwab and Vanguard have responded with their own advisory tools.
Whether you believe the startups or the traditional players will lead the industry into the future, investors will still want exceptional user experiences and advanced security across all channels. Solutions such as mobile app development platforms can be strategically used to ensure design and back-end services of mobile wealth management apps meet all of the user experience, security, regulatory and compliance requirements for both investors and asset managers.
It is the convergence of demographic trends and advances in technology that provide a unique opportunity for previously underserved market segments to benefit from the democratisation of wealth management. For those who could not previously afford a personal financial advisor or weren’t as comfortable with human-based advice, there are now more options to achieve their financial and life goals.
Some so-called “Robo advisors” or automated advisors are already gaining traction and attracting new clients, but future innovations in service are certain to provide additional opportunities to reach more wealth bands. There will always be a place for human-based advice to complement science-based advice, but it’s exciting that high-quality advice, regardless of the form it takes, will be available to more and more people.
It’s clear that there are forces and innovations changing how consumers invest. As a result, established wealth management providers have worked hard to extend their products and services to customers who've moved onto digital touch points. They are evolving product-focused approaches to digital-centric strategies and services designed around customer outcomes.
This new paradigm earns loyalty by delivering consistently excellent experiences across flexible and extensible platforms, enhanced by third-party apps and integrated channels.
Digital technologies empower customers like never before, transforming their relationships with wealth management providers and their use of financial products and services. The speed that customers embrace new touch points and service models is only getting faster, blindsiding traditional companies that still struggle to adapt.
According to Forrester Research, “Superior service and low or no fees are more important to customers than specific banking products themselves. To acquire and retain customers in a competitive field, wealth management companies must build trustworthiness and invest in support capabilities to ensure that they remain relevant in customers' lives.“
As wealth management products and services move into the consumer arena, they will need to create brand identities with an emotional bond between the consumer and the product. Inadvertently, these identities will, therefore, shift to the social meanings consumers have attached to the wealth management product or service.
Most of us seem to understand the inherent value of saving for our future. However, wealth management seems like something for people with more (notable) disposable income. None of us ever seem to have enough to save for our future and there is always something unexpected to pay for.
What’s clear is that people have considerable anxiety about managing their finances. Moreover, the fact that wealth management products and services are largely considered to be complex, complicated, intimidating and confusing – and you begin to see the challenge.
POSITIONING
As a result of the evolving landscape and consumer, the trend is to reinforce positioning as a Wealth Management brand that understands clients’ struggles and can help them relax with its simple solutions. This while showing the positive side of investing, thus, shifting the consumer from feelings of financial anxiety to demonstrating a path to success.
By partnering with the brand, consumers are optimistic because they have found a path to financial success, stability, and peace of mind. Savvy brands, therefore, need to cut through the noise and focus on the broader human lifestyle experience while empowering people to have control over their finances. They can do this by showing they have products that solve the anxieties of consumers who value clarity, simplicity, flexibility, and accessibility. The importance of bringing a more human perspective to the world of finance cannot be overstated.
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