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3 Steps for Wealth Managers to Empower Digital & Data for Growth

by Peter Hans
on February 13, 2017

3 Steps for Wealth Managers to Empower Digital & Data for Growth

As investment professionals we face a number of unenviable realities all focused on the fact that client behavior and perception is changing. For wealth managers this rings especially true. Your clients are dying, and if that’s not bad enough, their money is being passed on to Millennials!

We’re all aware of the relevance of this soon to be insanely wealthy generation of young people born between 1981 and 2000.  This generation is highly educated, knowledge seeking, and largely risk averse – qualities that can all lead to a healthy client/planner relationship. However, this is a generation that is also 73% more excited to engage in financial services with Google or Amazon than they are with an existing financial services brand. There are 84 million Millennials in the U.S. and they’re set to inherit over $30 Trillion!

If you’re reading this and thinking to yourself ‘there’s no way Amazon or Google enter the wealth management industry,’ wake-up. While this dynamic exists due to positive brand equity for the tech giants paired with legacy issues of “Wall Street” mistrust. The threat is further perpetuated by the simple fact that Google and Amazon know the advisor’s client better than the advisor – and it’s not even close.  

Google, Amazon, Facebook and a small handful of others know what we read, what music we listen to, what we do for fun, how often we run out of paper towels and much more. These companies know when we’re researching colleges, weddings, retirements, home purchases and every other major life event. These companies know more about us than we know about ourselves.

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And therein lies the painful irony – how can the advisor compete with the inevitable machine in a ‘people business’?In this case, the best defense is a strong offense. Enhance the ‘people’ portion of the relationship management to the point where the machine can’t compete, and do this through a little ‘big data’ of your own.

Here’s the playbook in three simple steps:

Increase your digital presence:

This is the easiest and cheapest way to reach clients, prospective clients and a broad demographic of prospective clients. The compliance aspect is well defined and there are many services that make it easy to navigate. If you want to be able to build meaningful relationships with sticky clients then you need to engage them in a manner that fits into the workflow of everyday life.

Leverage Behavioral Data:

Step 2 is the output of having a digital presence. The beautiful thing about the digital communication is that’s possible to track, warehouse and analyze massive amount of data. This is how Amazon knows what you are interested in buying based on the buying patterns of other similar consumers. It’s also how you can know, based on patterns of interaction with your digital presence. Ultimately, the capturing and analysis of this data will help you to quickly segment relationships, leads and different interest groups so that you can optimize time and relevance of interaction.

Be More Human:

I totally ripped this off from Reebok but it’s perfect. The one advantage the advisor has over Facebook and Amazon is that they’re human, and so are their clients (ideally). It’s human nature for humans to seek interaction and acceptance from other humans, so long as you don’t annoy them constantly.

So in summary, enhance a digital presence so that you can capture behavioral data, capture and analyze that data and then act accordingly. The machines won’t stand a chance against the Cyborg wealth manager.