The role of digital trust in wealth management

This article first appeared on the International Adviser website 7th July 2021.

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If you were in the market for a wealth manager, you’d most likely compare several individuals and firms and rank them against their past performance, core values, level of service and level of expertise.

And all of this would be in the pursuit of the question, who can I really trust to handle my financial decisions? asks Simon Binney, head of business development for Turo, at Wealth Wizards.

Trust forms the foundation of relationships in any industry. But more so in ours than in most. An unscrupulous financial adviser can cause an unsuspecting client huge damage, in the most extreme cases wiping out a lifetime of hard work and financial savings. So within an industry whose lifeblood is trust, it’s hardly surprising that financial advisers have been wary when it comes to utlising technology.

Anticipated breakdown of trust

But, against a backdrop of digitalisation and a global pandemic, attitudes to technology are changing fast.

A year ago, at the beginning of the UK’s first lockdown, many believed the sector would suffer because clients could no longer meet with advisers, in person. And the knock-on effect – so the argument went – would be a breakdown in trust.

But advisers were swift to respond to the changing dynamics imposed upon them by national restrictions. They embraced new ways of collaborating, integrated software tools which were better suited to working from home, and they ran their client meetings through video conferencing.

One survey revealed a fifth of advisers said new business was now “higher or much higher” amid the crisis – with some reporting growth of more than 30%.

So, as we emerge from the global health crisis, how can advisers increase trust with their clients? And how can technology help pivot to reflect the ‘new normal’?

Greater convenience

Perhaps counterintuitively, the new ways of working that have been forced upon us have actually done us good. One recent report found clients actually prefer advisers to take part in short update calls, instead of lengthy annual reviews, in person. The same survey revealed the pandemic meant that clients could access their adviser more easily and they cited this as being “crucial to building trust”.

Our assumptions that prospects and clients distrust technology have been called into question by the pandemic. We’ve discovered that, actually, ad-hoc video calls are much more convenient for everyone.

That’s great. But video calls are just the means to deliver the same in-person advice. Do we actually trust automated technologies to handle our financial decisions?

Well it turns out, the answer is yes. Over the past five years we have become so used to engaging with automated technologies that we’ve hardly even noticed. And if there is one thing the pandemic has proven to our industry is that we are not in fact an exception.

A recent US survey found that 85% of respondents said tech should complement, but not replace, human advice. Meanwhile, a separate survey indicated that consumers actually trust robots more than humans to handle their finances.

Human touch still required

That doesn’t mean technology is a competing force.

Instead, advisers need to look at how technology can enhance their client facing services. How can automation reduce administration? And if it can, how much less time and money will that cost the business? Or in other words, by how much will that boost productivity?

However unwelcome the pandemic is, it has created an opportunity for wealth managers to accelerate their digital transformation programmes.

Just consider what you could do if fact finding wasn’t so time-consuming. Our internal data shows that 95% of clients who have been sent fact finding elements to pre-complete, prior to a planned meeting, have completed them, saving between 30-45 minutes of call time, better spent focused on client objectives. And that’s actually higher than you’d expect when going through the same process with a human.

Now is the time to consider how technology can help better serve the needs of clients – and reach new ones – in a much changed landscape.

Next gen appeal

Integrating automation tools into the advice process enables advisers to focus more on their core activities, thereby delivering more value to customers and boosting productivity. Allowing prospects to seek out information outside of office hours and through the channels they favour means wealth managers can suddenly engage much younger audiences, who suddenly find themselves needing advice in an uncertain economy.

Moreover, by embracing automated technologies, wealth managers are able to bring down customer acquisition costs, enabling them to reach the younger and less affluent groups.

The last year has made us ask some tough questions. And what the future holds for our industry is yet to be seen. But one thing’s for sure. Digital trust has been cemented during the pandemic, and will continue to evolve. And, as they progress with their digital transformation projects, forward thinking wealth managers will need to establish digital trust throughout their processes.

If you'd like more information on digital and hybrid advice please email simon.binney@wealthwizards.com