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IBS Journal June 2017


29


“Many technologies arose in the past decade, some of which are key to meeting client expectations,” says Fernandez. Cloud, mobile, natural language recognition, chatbots, blockchain and machine learning all can perform a function in some way or another. Where the industry has really been disrupted, though, is in the creation of robo-advice and automated investment. Although it never actually involves robots – the closest you get is algorithms – the cost-effective nature or robo-advice has meant that bridging the “advice gap” is easier than ever before.


“Like it or not, firms will have to provide clients with an automated investment option,” says John Blackman, CEO at JHC Systems. Despite this, there are some services that robo-advisers cannot replicate: “robots do not provide emotional reassurance, second opinions and that there’s more to investment life than ETFs and index-linked OEICs.” A hybrid model is the way forward, where “the cold and clinical blends with the emotional and empathetic” and investors and advisers enjoy “the best of all possible worlds”.


Hacking reckons it’s difficult to see from the statistics what the real level of take-up has been for robo-advice. This is especially the case “when looking at the sub- segments of the overall wealth management and private banking market in more developed geographies.” Take- up in developing countries has also been fairly low. This paucity could be due to either “cultural or behavioural factors.”


The cloud, too, is making its impact on the wealth sector. “The cloud presents a game-changing opportunity for wealth management,” says Trousdale. “Its versatility allows unprecedented amounts of data to be brought together and used to deliver added value. It means clients can get content that’s personalised to them, and managers can do more with the information they have.” Cloud, he adds, allows businesses to “do things differently”.


Has the entrance of such new technology taken those already in the industry off guard? Its six of one and half a dozen of the other. “While technicians try to learn wealth management and banking, wealth managers try to adopt the new technologies,” says Fernandez. “The


key to successfully connecting the dots is collaboration between people with different skillsets.” A cultural change, far more of a challenge than the technology, is needed by incumbents.


While most might try to avoid irritating hashtags about Millennials, a new type of consumer is definitely emerging in the industry. Smart, tech-savvy and switched on to finding the best deals, are the new kids on the block driving the biggest changes? While wealth managers’ average clients are currently aged in their late 50s, 81% of managers – according to WealthX research – are trying to attract younger ones.


The requirements of ultra-high net worth clients has changed, says Hacking, with many demanding the channels and accesses which have been available to the retail market, combined with continued access to personalised advice and service.” At the same time clients lower down the investment scale are “choosing or having to become used to” a much more automated level of service, and this movement is “undoubtedly going to continue in the future”.


“Around 85% of high-net worth individuals use three or more digital channels,” states Trousdale. “Yet only 25% of wealth managers offer anything more than email when it comes to digital access to information.” The consumers of today expect digital, since their lives “are already driven by it”. 85% of UK-based millennials are comfortable with the idea of robo-advice, compared to just 37% of investors aged 40 to 75. “Although we clearly face a new type of consumer, it isn’t just the young generations driving change in the industry,” says Fernandez. “In fact, the digital revolution has transformed all generations. Irrespective of age, we are all using mobile super-computers known as smartphones.”


The issue for wealth managers is juggling the needs of multiple generations. “For a long time we were passing our wealth on to the next generation relatively shortly after retiring, but today we keep it for another 20 years or longer.” Fernandez believes that the most interesting age group for wealth managers right now is those above the age of 55: “this client segment has become more “digital” and informed than ever before. The future of


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