Digital advice trend accelerates
The coronavirus crisis of 2020 is accelerating a trend toward the digital delivery of financial advice, with significant consequences for planning firms.
That trend has become evident in a number of recent international surveys, which show growing consumer acceptance and comfort with digital services across a range of services – including healthcare, real estate and wealth management.
In the US, financial services brand and marketing consultant April Rudin quotes statistics showing 64% of high net worth individuals expect their future wealth management relationships to be digital.
“Everything has been accelerated,” Rudin told industry publication ThinkAdvisor. “The pandemic has given firms the ability to be much more digital, to stress-test digitalisation and deliver on some of the promises that perhaps were only on the roadmap but that advisors have been forced to adopt.”
In Australia, professional services firm KPMG recently released a report showing consumers of financial services have increasingly gone digital in the COVID-19 era, with almost 80% of 1500 people surveyed preferring online access.
“The pre-COVID-19 trend towards increased online access of insurance, superannuation and financial planning services has accelerated during the shutdown, with consumers of all ages increasingly see digital as the ‘new normal’,” KPMG said.
However, the survey also found a a clear generational divide, with most under-40s believing digital leads to better quality engagement while just 29% of over-65s agree.
In the UK, similar trends are evident. In July, major bank Barclays launched a digital advice service, ‘Plan & Invest’, in partnership with robo-advice firm Scalable Capital.
“Our customers said they wanted an investment service that gave them the convenience and affordability of robo-advice, but with more of the personalisation of wealth management,” said Dirk Klee, CEO of wealth management at Barclays.
The changes come amid a surge in people, facing heightened financial and physical threats, seeking out advice during the pandemic.
Still, the consensus is that while the pandemic has changed the way the public interacts with the wealth management industry – possibly on a permanent basis – personal interaction of some kind will remain important.
On that score, a new report from Aite Group argues that changing demands among older Millennials (aged 29-39) and Generation X (aged 40-54) for traditional financial planning services could provide an opportunity for firms to provide advice at scale.
These so-called ‘virtual coaching’ services charge fees for showing people where their money is spent, monitoring their savings goals, comparing their expenses to others and offering real-time advice on budgeting. This is coupled with more personalised retirement planning and wealth management services.
Aite said the findings indicate that hybrid offerings blending digital tools with access to a human adviser should find strong support among older millennials and Gen X.
Picture: Thought Catalog via Unsplash
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