The world of wealth and asset management is experiencing digital disruption like never before. Whereas once the industry was reasonably stable it is now being disrupted from all angles by ‘robo-advisors’ such as Wealthfront and Betterment, fund aggregators such as Mint and Etoro, and alternative investment models pioneered by CrowdCube and LendingClub.
A new generation of younger investors is emerging and this tech-savvy, digitally-minded and more progressive generation of investors does much of their own investment research. They are now able to educate themselves in investment decision-making through rapid technology advancements.
This is a major challenge for firms, because those that continue to sell even improved and updated products in the traditional way would simply be bypassed in the new purchase process.
The new purchase process affecting wealth management
Firstly, there is a pre-purchase experience that has largely moved online, and strongly informs the decision. Across every industry, customers are usually as informed as, or more informed than, the sales representative at the point of purchase. If there is a physical experience or personal contact, it is mostly to serve to reinforce and prove the expectations that have been constructed in the pre-purchase research phase.
Secondly, this research phase relies not just on product information from the firm, but on piecing together a range of sources, including customer reviews. The more authentic a firm can be in this process, while becoming the source of that multi-source information, the more authoritative they appear. This is true if it lines up with external validation.
Thirdly, the transaction is becoming frictionless, whether by removing human interaction at many stages, or through the instant provisioning of advice and assistance at the point it is required, without forcing customers through a standard process.
The move to content
As with every other industry, the salesperson is being replaced by quality content (or, in this case, the advisor). It’s not just that investors increasingly wish to make transactions digitally, they want to receive all of their information digitally, too. No longer are advisors and relationship managers the sole gateway to financial advice and unique insights.
However, whilst content is disrupting some parts of the wealth management operation, it is also increasingly becoming an important tool for doing business. Since wealth management is a highly regulated industry - and therefore the products offered by the various firms are largely similar, organisations are finding that they have to differentiate with superior content marketing initiatives.
This has also put a concerted pressure on wealth management firms to turn to content marketing as a means to attract and retain clients:
Neuberger Berman’s mission states on their blog that they ought to please their institutional investors with the best insights possible from the market.
Advisor Tech Tips provide useful advice by Putnam Investments to engage and empower the third-party intermediaries and advisors that work with them to recommend Putnam’s products.
Goldman Sachs use the power of their videos to cover capital and money markets, but also cover tangential topics such as ‘citizenship’ and ‘progress’.
Every month Schroders produces an infographic that summarises market activity from the month before.
BlackRock uses its iShares blog to host a range of infographics such as this hiking-themed approach to retirement saving.
Content Intelligence: the next big innovation in wealth management
The winners in wealth management, as in any other industry, will be those who are able to effectively communicate the most compelling value proposition at the right place and at the right time through their content.
To do this will require the adoption of technologies that can both understand wealth management content and track the interactions of clients that engage with it. Content Intelligence is used in other industries (such as B2B tech and media) to do just this, and increasingly forward-thinking firms are looking to it to help deliver insight to advisors and a relevant customer experience to clients.
The future of wealth and asset management looks set to be a rocky one. However, firms that commit to digital content marketing and making strategic use of digital technology will surely reap the rewards in an industry where other incumbents are hindered by both ideology and regulation.
By Andrew Davies, co-founder and CMO of idio.
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