World Wealth Report 2014 highlights digital demands of High Net Worth Individuals

Digital has become the pressing mandate for meeting client expectations, reducing flight risks and increasing profitability in the wealth management industry, finds the World Wealth Report 2014 (WWR), released today by Capgemini and RBC Wealth Management. The report’s Global HNW Insights Survey[1] found that nearly two-thirds of the world’s High Net Worth  Individuals (HNWIs) [2] expect to manage most or all of their wealth relationship digitally in five years and would consider leaving their current firm if an integrated channel experience is not provided.  

HNWIs across all geographies are demanding digital capabilities from firms, led by those in emerging markets. Eighty-two percent of HNWIs in Asia-Pacific (excluding Japan), 74 percent of those in Middle East and Africa and 70 percent of those in Latin America expect that the majority or all of their wealth management relationships will be run digitally in five years. North American HNWIs have the lowest demand with just over half (58 percent) expecting a primarily digital wealth management relationship in five years. 

Digital demands shatter some long-held beliefs

Long-held beliefs that digital is only for the young, less-wealthy or self-directed have been shattered as HNWIs expressed their digital preferences in this year’s survey.

• Wealth: Even the wealthiest HNWIs are demanding digital, with over half (55 percent) of those with over US$20 million in investable assets and three-quarters (74 percent) of those with US$ 10-20 million expecting a largely digital wealth management relationship in five years.
• Age: While demand is highest among HNWIs under 40, older HNWIs are also demanding digital:
  57 percent of those over 40 would consider leaving their firm if an integrated experience is not provided (compared to 80 percent of under 40s).
• Need for advice: It is not just self-directed HNWIs who are seeking digital capabilities from firms. More than half (57 percent) of HNWIs who seek professional advice expect their wealth management relationship to be primarily run digitally in five years (compared to 78 percent of self-directed HNWIs).

“Demands for digital capabilities know no boundaries when it comes to age, wealth, or geography. Clients want their touch points with wealth management firms to be seamless and fully-integrated every time,” said Jean Lassignardie, Chief Sales and Marketing Officer, Capgemini Global Financial Services. “These latest
World Wealth Report findings reinforce the importance of recognizing digital as a truly disruptive force in the wealth management industry, requiring firms to adapt their business models to meet client expectations.”

Digital capabilities that inform or enable transactions most important for HNWIs

Globally, HNWIs prioritize digital interactions that either keep them informedor enable transactions.  HNWIs place more importance on accessing information such as portfolio updates or investment research via websites than through in-person or phone meetings. Online capabilities are also favored when it comes to executing transactions, a preference led by those in North America and Asia-Pacific (excluding Japan).  In fact, about two-thirds of HNWIs would consider switching firms due to shortcomings in executing transactions or transferring money between accounts.

HNWI preferences become more personal, shifting to face-to-face and phone interactions when it comes to engaging with their wealth managers, particularly for advice. However, the WWR notes that this is likely to change given a high demand for digital capabilities from HNWIs under 40 across all types of interactions with firms, including twice the demand for mobile, video and social media capabilities compared to their over 40 counterparts. This heightened demand puts increased pressure on firms to adopt a digital mindset as younger HNWIs acquire greater wealth and prominence.

“Digital capabilities offer significant opportunities for wealth management firms to enhance their relationships with clients”, said M. George Lewis, Group Head, RBC Wealth Management & RBC Insurance. “Firms need to view digital as being essential to delivering a seamless and integrated client experience, and prioritize their investments based on how clients want to engage with their wealth managers and the firm.  We have seen firsthand the growing interest in digital capabilities and continue to identify opportunities to incorporate digital technologies that contribute to the client-wealth manager relationship." 

Firms need to shift their mindset and engrain digital throughout the client experience

To remain competitive in the future and to fully capitalize on all that digital has to offer to wealth management firms and their clients, firms need to adopt a transformative mindset that engrains digital throughout their interactions with clients.  Forward thinking firms will recognize that having advanced digital capability is not optional and will focus on building a digital vision that adapts to how HNWIs want to interact.

Firms that successfully make this digital transformation can deepen client relationships, reduce administrative tasks for wealth managers, drive significant savings, build a reputation as a forward-thinking firm, and ultimately improve the client experience, and boost client retention.