Wealth Management

Investor behavior and preferences are changing the wealth management industry. According to Broadridge’s 2023 CX and Communications Consumer Insights report, customer experience (CX) expectations continue to rise, and have nearly doubled since 2019. Dissatisfaction is on the rise as well, especially within the retirement industry.

Wealth management firms face two significant challenges: they have to improve their CX, which means creating more personalized communications. That’s only possible if they equip their financial advisors with tools that can make personalization happen at scale.

Clients are increasingly hard to satisfy, meaning firms have to step up their game. Leaders are investing in digital tools to rise to the challenge — and to retain their top talent as well.

Customer satisfaction makes a major difference

In the wealth management industry, table stakes and a saturated market can make exceeding CX expectations a sizeable differentiator. Negative experiences run the risk of lost business, yet customer dissatisfaction is still high.

There is a significant gap between what investors expect and what wealth management firms deliver. Only 14% of those surveyed said investment companies lead in delivering the best customer experience, whereas 10% say retirement funds and 61% of banks excel above other businesses. More than 80% of consumers want a customized experience, but less than 28% say they’re receiving one.

Businesses understand this challenge. Sixty-seven percent of respondents to Broadridge’s 2023 Digital Transformation and Next-Gen Technology Study say companies have to focus on CX or risk being left behind. How firms react, and where they choose to invest, can make a major difference.

What’s at stake in the race to innovate

The ultimate reward for innovation is client retention. Fifty-four percent of wealth firms say client retention is a top benefit of digital transformation and next-gen technologies. When a client gets what they expect and more, they reward their advisor or brokerage firm with improved net promoter scores (NPS) and referrals.

This can only happen if advisors have modern, digitally sophisticated tools to help them meet their clients’ high expectations. This creates a twofold challenge for firms: to keep clients happy, they must also enable their advisors with leading technology.

“If advisors aren’t getting the technology they need to meet the needs of their clients, they may leave and go to a firm that can offer that capability,” says Donna Bristow, Chief Product Officer of Wealth Management at Broadridge. “Investors will do the same thing — they’ll start building a relationship with someone who can provide it.”

Clients expect hands-on, customized experiences from advisors. This is only possible if advisors have the tools to automate time-consuming tasks, allowing them to focus on client satisfaction. Wealth management businesses need to attract and retain a diverse network of advisors and equip them with cutting-edge technology to increase productivity while driving down operational costs, and enable advisors to service emerging investor needs, rising expectations, and preferences.

“Simply put,” says RP Sandilya, VP Business Development for Broadridge, “firms are investing in solutions to increase personalization of services and productivity.”

The pace of transformation is accelerating

The C-suite sees a digital future

Digital transformation is the top strategic priority for many wealth firms. Despite economic headwinds, they are ramping up investment to stay competitive as industry dynamics evolve.

Making transformation manageable

Technology modernization and simplification pose challenges and risks of their own. As far as modernizing outdated legacy systems is concerned, some firms are taking a “lift-and-shift” approach to innovating legacy systems. But upgrades have a reputation for being expensive, time-consuming, and carrying a risk of negatively disrupting business functions.

“Forward-thinking wealth firms are tackling digital transformation by implementing innovative front-to-back-office wealth platforms based on open architectures and a suite of plug-and-play component solutions they can build upon, with a consistent CX, as business needs evolve,” says Bristow.

The incorporation of next-gen technologies and tools in the wealth management space is not a far-off or futuristic concept. Digital workstations, websites, AI, predictive modeling, powerful data analytics, self-service tools, and digital marketing that communicates with clients at the right time through their preferred channels are real-world solutions. Firms can implement these tools through cloud- and API-based solutions that integrate with existing systems. Many are already seeing tangible benefits.

“This approach is more scalable, building a tech ecosystem that can evolve with the firm, emerging tech, and investor needs,” Bristow adds. “We’ve found that the top-three benefits firms are seeing almost immediately as a result of their digital transformation efforts and the incorporation of next-gen tools are customer retention, cost savings, and greater business agility.”

Measuring success

Wealth firms are seeing tangible benefits from transformation and next-gen technologies, with a positive impact on their customers.

Acceleration on your terms

In the face of rapidly advancing technology and a changing industry, modernizing is more manageable and effective through a componentized approach with a trusted third-party provider. Through a combination of new technologies and customized strategies, firms can take a three-step, incremental approach to scale and accelerate their modernization:

1. Modernize your tech stack

Through componentization with a third-party provider, firms can stipulate the level of financial investment and the timeline to implement their choice of solutions. This approach can empower firms to replace key components individually, without jeopardizing the functions of other systems, effectively lowering the risks and costs associated with modernization. A componentized approach and its advantages extend to major improvements for advisors, investors, and the firm’s overall digital transformation journey.

2. Amplify the investor experience with new technology

Embracing next-gen tools enables firms to deliver on consumer experience expectations and preferences at scale. Firms can personalize investor experiences through analytics and predictive insights and increase productivity by streamlining daily processes and tasks. This allows for the advisor to focus on value-add tasks to provide clients with a better investor experience.

“With the technologies and tools of today, we can provide that custom experience for customers,” Bristow says. “But from an advisor and firm perspective, they can do it in an automated fashion. This allows advisors to give that experience without adding a lot of work into their already busy days.”

3. Unlock the power of data for advisors

More than 70% of firms say AI is already significantly changing the way they work. Next-gen tools that harness AI and machine learning facilitate better decision-making through powerful analytics and predictive insights. The large volume of valuable data is something advisors could not process on their own: when given the right technology, they can use this information to personalize investor experiences and deliver better, data-driven recommendations without creating more work.

“We’ve seen that adding new, agile component solutions can help accelerate digital transformation and protect technology ecosystems against future obsolescence,” Sandilya says. “Where these next-gen tools are embraced, firms are already experiencing tangible benefits in the areas of advisor productivity and client satisfaction and retention.”

Today’s investor is increasingly digitally savvy. And as technology advances, their expectations rise with respect to what advisors deliver — because investors know what they want, they know how they want it, and they know what’s possible. Advisors need the tools to accommodate these changing needs. Otherwise, either they or their clients will take their business to a firm that does.