The wealth management sector is confronting considerable obstacles in fulfilling the increasing technological demands of clients. A recent survey conducted by Avaloq, a provider of digital banking and wealth management technologies, revealed that 25% of global investors are contemplating leaving their wealth managers if they do not upgrade and embrace new technologies. The survey included responses from 300 wealth managers and over 3,000 investors from Europe, Asia, and the Middle East.
The findings indicated that 63% of investors appreciate receiving in-person demonstrations regarding how their investment choices influence their portfolios, while 66% consider having access to investment analytics and portfolio visualizations as crucial for fostering trust with their advisors. Nonetheless, numerous wealth managers are burdened with obsolete and inadequate technological infrastructures. The survey showed that 44% of participants classified their systems as outdated, while 31% indicated these systems did not meet their requirements.
Consequently, 37% of wealth managers globally fail to utilize investment advisory technology during client consultations. The disconnect between investor expectations and the practices of wealth management is particularly glaring in the United Kingdom.
Challenges in Wealth Management Technology
Investors in the UK rely more heavily on technology to build trust with their wealth managers, as 72% value the capability to view investment data and understand the effects of their choices in real-time. Despite this, half of the wealth managers in the UK do not employ investment advisory technology in client interactions. Suman Rao, the UK Managing Director at Avaloq, noted, “Our findings indicate that while wealth managers are facing mounting pressure from clients to integrate technology into their services, many are struggling to keep pace.
Complicated, outdated, and poorly synchronized technology systems present a major obstacle.”
Rao stressed that technology providers have a responsibility to supply the crucial analytics, automation, and visualization tools needed by both wealth managers and clients. For wealth managers to remain pertinent and competitive, it is vital to have smoothly integrated and intuitive technology platforms that meet the changing demands of investors. As the wealth management landscape continues to develop, firms that adopt innovative technologies and emphasize digital strategies are experiencing increased revenues and gaining an edge over competitors.
According to Netwealth’s 2024 AdviceTech report, 23% of advisory firms belong to the leading group in technology adoption, with 81% reporting revenues exceeding $1 million for the year ending on June 30, 2024. These early adopters of technology also utilize artificial intelligence (AI) in many aspects of their operations, including summarizing client meetings, content marketing, automating back-office tasks, and developing financial plans. As the financial advisory sector advances, embracing cutting-edge technologies and robust digital strategies will continue to be essential for success.
