What the wealth industry can learn from digital retail

Register now

One thing we’ve learned in the digital era is that the customer experience is everything. It’s no accident that Amazon is the juggernaut it is today. Since founding the online retailer, Jeff Bezos has focused on one thing, and one thing only: the customer. And it’s paid tremendous dividends.

We’re just now starting to witness what I call the Amazonization of the wealth management industry. A recent research report by Roubini ThoughtLab, "Wealth and Asset Management 2022: The Path to Digital Leadership," describes how wealth management firms are looking to promote client-centricity in an effort to meet rising customer expectations.

Industry leaders agree: Today, it’s all about digital-first engagement and delivering a seamless customer experience.

Thanks to companies such as Amazon and Google, consumers everywhere now demand the kind of experience only a digitally mature enterprise can deliver. Roubini’s study captures where respondents expect to see the biggest changes in customer expectations in the next five years:

Product simplicity and transparency. Customers don’t want to be confused and they don’t like hidden costs and fees. Mobile carriers have started moving to one-price monthly billing. Similarly, many advisors in wealth management have started to adopt level-fee pricing models.

Anytime, anywhere and any device access. Many consumers now own both a smartphone and a tablet. Connected wristwatch sales are exploding. Companies are scrambling to deliver a seamless experience across any device. Can you make a stock trade simply by talking to your wrist? If not, why not?

More innovative products. The Roubini study included a remarkable statistic: 71% of broker-dealers surveyed “are not ready for fintech.” They’re not ready for the competition tech startups bring to the market. And they’re not prepared to adopt the emerging and innovative technologies needed to offer more compelling products and deliver the kind of experience customers crave. Finding ways to close this gap should be a top priority moving forward.

To meet rising customer expectations, wealth management firms will have to draw insights from changes in the retail industry. Here are three especially compelling principles:

Frictionless ease of doing business. A few years ago, Amazon developed a homepage dropdown menu where every sub-menu instantly appears when the cursor hovers over it. It’s still an engineering marvel that facilitates extremely fast site navigation. Then, Amazon patented the one-click purchase button, which enabled virtually frictionless “checkout.”

Wealth management companies should take cues from these kinds of innovations. According to the Roubini study, in the next five years, 50%-60% of retail investment firms plan to offer digitally enabled onboarding and integrated client experiences. It’s a great start, to be sure. But is your website slow or too complicated? How many clicks does it take for customers to do things they want to do? If your client wants something right now, can you make it happen?

Personalization and customization. Recently, the storied leather goods company, Coach, announced it would change its name to Tapestry. Why? They’re moving their product lineup to totally bespoke handbags and other accessories. In future showrooms, customers will use specialized — rumor is holographic — computers to individually design their own handbag on a made-to-order basis.

There’s no telling whether this plan will bear fruit. But I believe their pivot is instructive. First, it shows that in the digital era even a 100-plus year-old company like Coach must change everything in order to compete. Second, it suggests that wealth management firms will similarly have to reimagine what it means to deliver a truly personalized experience.

Roubini's study reports that 60% of investment firms plan to offer customized products and services in the next five years. During this transition, how can we ensure that customers can access what they want — and only what they want? How can we be sure product and investment recommendations reflect a deep understanding of each client’s unique situation? How can we craft a client journey that builds greater loyalty?

Customer engagement. A few years ago, Capital One tried a unique setup: A physical bank branch turned into a “Capital One Café” (a coffee shop that also happened to provide banking services). They realized most customers don’t really have a reason to visit physical branches anymore, yet they still wanted to find ways to connect with customers in more personal ways.

It’s not clear if the arrangement had the desired effect. But the experiment illustrates that wealth management firms must rethink how — and where — we’re meeting our clients. According to the Roubini study, we’re likely to see huge increases in the use of virtual webinars, web collaboration tools, video, social media and smartphone apps. And other research shows customers look for a social community where they can gather investment advice and learn about different investment options. How do we better engage clients? In what ways can we facilitate social conversations? Are we doing basic things, like providing 24/7 access across any device?

Amazonization is just beginning. We have a lot of catching up to do.

For reprint and licensing requests for this article, click here.
Fintech Technology Mobile technology Investment technology Robo advisors Broadridge