Tech-savvy investors want digital solutions, but firms lag behind

Tech-savvy investors want digital solutions, but firms lag behind

2:45pm EDT

By Michael Leibel

NEW YORK (Reuters) – Executives at top U.S. wealth managers say they need more technology to maintain their market-leading positions as younger investors seek to manage their money in a digital world, but research shows firms are not keeping up with client demands.

Many managers are more comfortable meeting face-to-face with clients. But a preference for video chat through services such as Skype is becoming more prevalent, especially with under-40 investors.

“As individuals have started using other full-featured applications for other purposes, they’ve grown to expect that level of sophistication from everyone, including from their [wealth management] providers,” Brent Beardsley, North American asset and wealth management leader for Boston Consulting Group, said in an interview.

Between 40 and 60 percent of wealth management clients want direct wealth manager contact via video chat, but fewer than 20 percent of banks offer these services, according to BCG’s 2014 Global Wealth Report. More than 60 percent of clients want investment recommendations and portfolio analysis delivered online, on both web and mobile applications. But only half of wealth management firms offer these services, the June 9 report said.

Millennial investors, a broad group generally under the age of 40, drive most of this demand. Nearly 77 percent of high net worth individuals under 40 conduct most or all of their wealth management functions through digital channels, according to the 2014 World Wealth Report from Capgemini and RBC Wealth Management. In five years, that is expected to jump to 82.5 percent.

Demand also has increased because older investors have become more tech savvy, Beardsley said.

But video chat, interaction via social media networks and automated portfolio analysis and simulation remain limited.

Greg Fleming, president of Morgan Stanley Wealth and Investment Management, said a “fair amount” of the company’s $500 million annual technology budget is for client interactions. A recently launched mobile application that allows clients to deposit checks by uploading pictures from their phones is just the beginning, Fleming said.

“We’re not looking to just catch up.” he said, “We have the scale where we should be the best in technology.”

Morgan Stanley plans to introduce a revamped online experience in early 2015, with enriched portfolio reporting, bank and cash management and data visualization features to help clients understand their investments.

TD Ameritrade Holding Corp executives said mobile orders averaged 13.4 percent of the firm’s daily trading volume in the first quarter, up about 50 percent from year-ago levels. The brokerage is upgrading its order-taking systems and building out a video chat function.

Some are concerned the growth of digital solutions will make advisers less relevant to a younger generation of investors. Others are more sanguine about the future.

Frank Porcelli, a managing director at BlackRock Inc, the world’s largest asset manager, said he isn’t worried about financial advisers becoming obsolete.

“People talked about WebMD,” said Porcelli, who heads BlackRock’s retail business. “But when you’re sick, you actually go see your doctor.”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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