How 'mass personalization' can capture affluent investors' trillions

Wealth managers have long sought out and prioritized high net worth individuals, defined as having more than $1 million in liquid assets. But in 2022 the global landscape shifted dramatically. In that year, according to Capgemini's 2023 World Wealth Report, that segment experienced the steepest drops in wealth — by 3.6% to $83 trillion — and in population — 3.3% to 21.7 million — in the last decade. 

Although HNWIs, as the industry acronym goes, will always be with us, wealth management firms and big banks, like smart investors, must diversify to find new revenue streams with long-term value. Affluent investors, a wealth band with investable assets typically between $250,000 and $1 million, are likely candidates. Our research indicates that 95% have not been served by traditional wealth management firms. That's a missed opportunity, since affluent investors hold nearly $27 trillion in assets.

Capgemini

Many wealth managers are held back by outdated, laborious processes that create friction throughout the client life cycle, from acquisition to service to relationship building. To successfully attract and serve what has been dubbed the next generation of HNWIs, wealth management firms will need to solve the tricky equation of scaling up their digital capabilities  and keeping costs low while providing the expertise and service that the affluent segment seeks. This starts with moving away from delivering commoditized offerings to meet the demands of affluent investors. Firms need to capitalize on the chance to onboard this untapped tier of clients using cost-effective strategies to deliver mass personalization through technology-enabled customization.

A wealth manager's wealthiest clients, of course, will also benefit from technological innovations such as streamlined workflows, synchronized communication and other efficiencies. Many financial institutions currently have volumes of data on their high net worth clients but don't have the tools to transform this information into intelligence. As a result, they're not meeting the expectations of these clients, which has resulted in a fragmented user experience and an erosion of trust and loyalty. Our research found that just 25% of HNWIs said they would recommend their wealth management firms to others. Worse: Nearly 31% said they would likely switch providers in the next 12 months.

Not all clients, regardless of their wealth tier, want high-touch services or full-fledged digital operations. Rather, they are seeking a constantly changing combination of options. The key to providing such mass personalization at the right price point is developing digital workstations and omnichannel engagement tools to anticipate clients' needs in order to provide personalization at scale. Rather than being stuck in silos, client data is democratized — in some cases with an AI-powered dashboard — so everyone has access to client details from discovery to engagement. This lets wealth managers, marketers and business leaders set goals and prioritize tasks and actions effectively and efficiently. A mobile app allows investors to get in on the action, learning about their investments and planning, engaging more deeply with their wealth managers and gaining an improved customer experience overall. 

READ MORE: Half of wealth management clients could be a flight risk: report

Wealth management firms and big banks are no strangers to the headwinds caused by digital transformation. Yet many are still overly reliant on HNWIs instead of continuously innovating to gird themselves against the future's unpredictable markets. The way forward to growth lies in using technology to access the emerging affluent sector while delivering an experience that engages all client tiers and engenders long-term loyalty.