To Serve Today’s Wealth Management Clients, ‘You Have to Be Bionic’

Wealth management today should be more Six Million Dollar Man and less The Terminator.

By Brian Nixon

Wealth management, like other sectors of the banking industry, is confronting a major question: What exactly is the right blend of human and digital resources to bring to bear in best serving clients?

Should wealth management services be purely digital? Adviser-assisted? Traditional? The answers may vary, but most experts seem to agree that the best strategic response may be a blend of both human- and robo-assisted services.

“You have to be bionic,” says David Canter, an EVP at Fidelity Investments. “The technology is an enabler.”

“The answer is somewhere in between,” says Blake Wood, SVP and director of program innovation for Envestnet. “It’s how customers want to engage.”

“Technology is a challenge and an opportunity,” says Barry Dayley, EVP at Money Concepts International. “Some of the things that we have access to are so cool. The things you can do for a client are amazing.” Dayley’s firm is endorsed by ABA for the wealth management and financial planning services it provides to the banking community. The firm’s turnkey business model provides banks ownership of a wealth management business, independent and non-proprietary products, an integrated technology platform, and staff training and education.

Within that service milieu, wealth management digital services, such as robo-advisers, do have a place. “That may be a customer’s best approach,” says Dayley. Still, he notes, “when people reach a certain point—possibly $150,000 to $200,000—they want to talk with a live person.”

Envestnet’s Wood suggests that age is also a factor when it comes to wealth management clients and digital technologies and services. “A client is going to age out of a digital solution,” he says.

In any case, the biggest threat is the status quo. That’s the assessment of Mitch St. Peter, senior business development officer for FutureAdvisor, a BlackRock company. “Do you have senior leadership to drive new business processes?” he asks. “How committed are you to this business and changing how you do business?”

Fidelity’s Canter suggests that overall fee compression in financial markets is a leading indicator of the coming digital disruption. “The canary, perhaps, is in the coal mine,” he says. “If you want to defend fees, you’ve got to supply more value. Automated investment is going to be a table stake.”

Even further, Canter believes that the entire wealth management landscape is evolving. “We might be moving beyond wealth management to total life management,” he says. And with that, wealth managers will be using digital tools and resources to perform “deep, deep discovery” to better serve their clients.

Done properly, technology such as data aggregation tools can help build a closer relationship between wealth managers and their clients. “All of this drives collaboration and engagement,” says Wood. Clients should be able to see everything, and to learn things from their wealth management advisers at a distance through co-browsing technologies.

A key point is to know your customers and to be able to easily identify their needs both now and in the future.

“We’ve found that by approaching the marketplace with a holistic view, we tend to help the client make better long-term decisions,” says Dayley. “We’re not really focusing on trying to sell a product to them. Our focus is on trying to figure out where they are and where they want to be, and then help select programs or products that might be suitable for what they need. That’s our approach.”

From the human standpoint, a community bank’s wealth manager starts out from a position of strength. “We find that at community banks the wealth manager is going to know more about customers than any other person in the institution,” Dayley adds. “Hopes, dreams, fears and things no one else may know. These are powerful tools for serving the customer and developing a loyal relationship.”

In fact, wealth management doesn’t always mean working with wealthy clients. “We’ve found that we don’t need to work with real wealthy people to be successful in wealth management,” he says. “Regardless of where they are, a holistic approach can be helpful to them.”

Case in point: He once had a client who said, “I’m not wealthy and don’t have a lot, but I just received a $5,000 inheritance from my grandfather. Can you help me figure out what to do with it?”

He replied: “Rather than sell a product, I said let’s sit down with you and your wife, figure out what your goals are and develop a plan. Then we’ll make a better, more informed decision about that money.” Upon meeting, Dayley learned that the couple had a lot of debt from the establishment of a new business. As a result, the best investment for the couple was to pay off some of their debt.

“We were able to turn a negative cash flow into a positive cash flow, and they became great fans,” says Dayley. “I didn’t make a lot of money working with them, but they referred a lot of people to me.”

Dayley and other wealth management experts see a generational challenge when longstanding client relationships change, as they inevitably must.

“What we’ve discovered is that unless a financial adviser builds a relationship with children or grandchildren, when that client dies, the chances of those assets staying with that program are very slim,” he says.

Still, he adds that “wealth managers have to consider the idea of connecting generations through the wealth management process. That’s really a natural part of our business. Parents and grandparents want things for their children and grandchildren. A good, well thought out generational wealth management plan can be very critical in helping those families get the things they want.”

For banks looking to enter the wealth management space, training and a cultural alignment in support of the program are critical. “If a community bank wants to offer these services, it has to become a strategic objective of the organization,” Dayley says. “The bank has to get behind like it would for any other strategic objective. That can be a big challenge.”

Another problem for a smaller institution is becoming too reliant and successful with just a few wealth managers. In such a situation, a bank becomes at-risk for becoming excessively rep-centric. “The problem is that the reps have become the program,” Dayley says. “The reps are important, but they shouldn’t become the program.”

Even so, Dayley and others are bullish about wealth management and the ongoing blending of human and technological capabilities. “If there was ever a time when this service was needed, it’s now,” he says. “We can turn lives around. Studies have shown that people who work with an adviser are better prepared. The adviser is a motivating factor who holds clients accountable.”