wealth managment

Building A Total Picture of Wealth Through Digital Engagement

By Mark Trousdale, Chief Growth Officer at InvestCloud  

Wealth managers are only able to best serve their clients when they truly know them. But it can be hard to ensure they have all the right information, or the right resources in place to gather the data they need. 

Information has never been more vital than it is today. In order to resist the commoditisation of wealth management and counteract fee compression, many advisers are turning to providing holistic financial advice. Here, wealth managers are devising strategies to not only build wealth, but also to manage expenses, protect a client’s family, lifestyle and assets, plan income for now and in retirement, and determine how to pass wealth onto the next generation – all in a tax-effective manner. 

But this is only possible if a wealth manager can completely understand each client’s unique needs and circumstances. Collecting and collating this information is a long and arduous process, beginning with onboarding and continuing right through the client’s lifecycle. Providing holistic advice requires a manager to build the total wealth picture of a client. So how can this be achieved? 

  

The role of effective digital engagement 

Wealth advisers are used to collecting certain types of information – existing holdings, retirement ambitions, other goals and so forth. To create a holistic proposition, wealth managers must go deeper. 

This must begin not just at the onboarding stage, but even further upstream. Creating prospect portals allows wealth managers to create functionality where the prospect themselves can enter relevant information. Then, as the client progresses to onboarding, account opening and investing, they enter more information that enables a manager to build a more complete picture. 

At all stages of the client lifecycle, digital engagement allows managers to better understand not just their client’s finances, but also their concerns, fears and hopes for the future. This is achievable through effective digital warehousing – where data is not simply stored in silos but integrated in one place, run through data science engines and fed back into other areas of the business. 

Through a digital warehouse, every click and view can be recorded, which gives managers data on the areas visited most frequently by the client. This integrated information can include all manner of structured and unstructured data – external news, social media and documents, alongside market and portfolio data. Having this information allows managers to create bespoke packages and investment opportunities for their clients and therefore provide a more structured approach to wealth management. 

  

Applying gamification techniques

Gamification allows financial advisers to understand clients and present information to them in a way that inspires end-user action. Examples include push notifications to encourage end-users to act on information, or risk questionnaires made more engaging by rewarding completion. Gamification is also a powerful tool for data collection – which needs to be at the heart of any financial firm.  

Looking at wealth management for HENRYs – high earners who are not rich yet – the Smart Dynamic approach can be used. This means gamifying educational materials, so users are motivated to digest material at a quicker pace. Using this method results in investors becoming more confident in understanding financial jargon, therefore more confident in making important decisions with their money. Similarly, the Appointment Dynamic technique is used to encourage users to ‘play’ on a regular basis. For example, a wealth manager can highlight specific articles to be read later or encourage clients to move up ‘levels’ with the content they read. 

Delving deeper into digital personas and behavioural science, wealth managers should look at the following two personas; a self-selector and a goals-based planner. The self-selector typically occurs in the sophisticated mass affluent as well as high-net-worth individual (HWNI) segments. As these groups know the market, they want in part self-sufficient, seeking advice for some circumstances but engaging directly with others. A wealth manager can tailor content that speaks directly to these personas, allowing for a better customer experience.  

The HENRY group usually aligns to the goals-based planner persona. This covers all aspects of financial wellbeing, making asset management programmes easier to understand. To do this, the wealth manager gathers information regarding investment goals and risks in order to create a bespoke plan. Clients that are engaged with their wealth manager will remain loyal – this particularly applies to millennials, the next vanguard of the HNWI market. In 2017, Accenture produced a report that revealed 65 percent of millennials want gamification that will help them learn more about investing and keep them more engaged with their portfolio. 

  

The final piece of the puzzle 

Through gamification of digital wealth services, wealth managers can unlock engagement, while gathering information about their clients. However, gamification must be aided by decision theory.    

Decision theory reinforces a wealth adviser’s recommendations. For example, an adviser can understand if a client makes decisions based on herd mentality – investing in the same things as their peer group – or whether they have a lower risk aversion and are open to counterintuitive investments. This allows advisers to frame client recommendations accordingly.   

Another example of applied decision theory is Availability bias. This is when clients receive information they understand, and in context. For example, a dip in an investor’s portfolio value can concern him or her but framing this information correctly will ensure the client stays on the investment plan.    

Decision and gamification theories can be applied across client discovery, investment selection and proposal generation. For advisers serving mass affluent markets, online portals and digital onboarding is commonplace – usually in the form of risk profiling tools and questionnaires.  

The combination of digital engagement, gamification and decision theory is a winning strategy that shows us that clients react well when their experience resonates and is unique to them. It keeps clients close, more informed and engaged – from onboarding and right through the client lifecycle. 

It is with these techniques that wealth managers can create the full digital package for their clients, therefore securing customer loyalty and growth. Especially through turbulent markets and the societal threats of this year, education is power, so what better way to keep up than at the click of a button?