In June, Morgan Stanley and Oliver Wyman published a “blue paper” entitled After the Storm, discussing the ways that COVID-19 “has permanently changed the way Wealth Managers deliver advice and serve their clients.”
The study identifies four areas of focus necessary to be a top performer:
1. Investment in technology
2. Strategic cost-cutting
3. Differentiated product offerings
4. Inorganic growth opportunities
Not surprisingly, much of the discussion on technology pertains to driving engagement through digital touchpoints. The current environment reinforces the value that a live person can add during times of turmoil. Even prior to COVID-19, a survey of HNW investors conducted by Oliver Wyman found that more than 85% of investors value the ability to talk with an advisor, while less than one-third value advice delivered through a robo-advisor. However, as we all have seen, the way in which human advice and interaction can effectively occur has changed significantly over the past six months. The study found that in Q1 2020, digital engagement across all digital channels increased seven to ten times for select leading managers, with significant impact noted in research consumption, client facing webinars and virtual client visits.
Importantly, this trend is expected to continue, with the survey estimating that by 2024, only about one-fifth of interactions will be face to face, with 35% taking place telephonically, via video conferencing or through live chat.
The implications of this are clear. Advisors who think this is a temporary trend and do not make the effort to adapt will find it difficult to keep pace with those who do in terms of business development and relationship building. Wealth management groups that are part of larger entities with deeper pockets to invest in technological innovations may be able to benefit from this advantage. As an example, Merrill Lynch is investing significantly in refining and improving its Personal Wealth Analysis integrated financial planning/asset management tools as a way to better engage with its clients digitally. Smaller advisors must find ways to leverage outsource technology options to keep up or risk being left behind in client acquisition and retention.