Prior to the pandemic, the industry of wealth management has been associated with high touch, personal relationships and face-to-face advisory sessions. Customers of private banks or wealth institutions were used to be received on-site, at their branch, probably in a wood paneled office and welcomed by their relationship manager in a tailored suit and a tight tie. Innovation through technology was once seen as a threat to the traditional wealth management profession, but the pandemic acted as an accelerator to the digitization process and has left industry players no choice but to look for the development of new advisory models.

One such model is the hybrid-advisory approach, which combines the benefits of both human advisors and digital tools providing for the customers, and offers cost reduction for banks and access to lower payment scale customer segment that was earlier underserved by traditional advisory. But how can such a traditional industry drive new digital innovations to lead to reduced costs and improved efficiency of the human advisory teams?

The hybrid model

The advisory journey is long and full of challenges

According to a report by McKinsey & Company, wealth management advisors spend 60–70% of their time on non-advisory activities: administrative tasks, such as opening new accounts, onboarding clients, and preparing reports. This limits the time they can spend on more strategic tasks, such as developing investment strategies, prospect generation and providing personalized advice to clients. According to the same study, the major obstacles to reducing non-advisory time is the lack of unified platform and still high degree of manual data processing.

report by McKinsey & Company


Similarly, a study by Accenture found that a bit more than 6% of relationship managers in Asia spend half of their time each week on administrative tasks that do not directly generate revenue. Even more, the study shows that the lack of integrated tools and capabilities leads to RMs frustration – 11% are extremely frustrated, and 20% are somewhat frustrated by the lack of task automation. 

An important insight from these studies is that the voices also come from the investment advisors: they believe that automating their administrative tasks could help them to improve efficiency and free up more time to focus on higher-value activities. In conclusion, wealth management institutions that are able to successfully implement a holistic and seamless experience, both for their RMs and customers, will continue to be among the leaders of financial institutions. 

The hybrid approach to wealth management empowers people through technology 

A well-defined hybrid customer advisory experience is a key differentiator and – on this market where competition is tough – can bring a significant competitive advantage. Finding the right balance between human advisory and using digital tools is the key to significantly improve the efficiency and effectiveness of wealth management advisors, allowing them to focus on the more strategic tasks and provide clients with a higher level of personalized service.

Using technology and automation in the wealth management space can have various forms. First of all, banks can leverage digital onboarding by using their already existing and trusted banking app. Technologies like AI can help with collecting and verifying significant amount of personal and financial information, documentation can be generated and signed electronically, etc. Another example is the automatic rebalancing of customer portfolios: to ensure that portfolios remain in line with customer investment objectives, automation tools can help advisors to quickly and accurately calculate the optimal allocation of assets, and execute the trades more efficiently. Some tasks related to market purposes, for example customer targeting, can be also automated.

By using technologies like AI, financial institutions have better understanding of their customers’ needs and preferences, and can target them better and at the right moment, in order to deliver them personalized products and services that meet their needs. Last but not least, the overall communication – from sharing messages or documents to providing customers personalized recommendations – can also take a hybrid form by incorporating a human advisor into the digital communication channel, giving a sense of human-touch and high-touch at the same time. 

And that’s the clue – the hybrid-advisory service-delivery model is all about combining the expertise of human advisors with the convenience and accessibility of digital tools. 

Digital and human capabilities

Are customers and financial institutions ready for digital-enabled advisory?

We see that younger generations are more eager to use digital tools and interact both ways, and trends show that customers want a seamless experience between physical and digital interactions. But naturally, changing the way of serving customers, no matter the industry, comes with its challenges.

One of the big challenges for the wealth management firms is to find the right balance between technology and a human touch. While some customers may feel comfortable using digital tools to manage their finances, others may prefer a more traditional and high-touch approach. Therefore, the companies must ensure that customers receive seamless and high-quality advice, regardless of whether they are interacting with a human advisor or a digital tool. Moreover, a big challenge for firms is to invest in the right technology. Indeed, choosing the right tools (digital platforms, data analytics tools, AI-powered systems, etc.) and finding the best partners to do so can be tricky. Last but not least, financial institutions have to train their staff to use digital tools effectively and provide high-quality advice, and support their customers through the hybrid model.

When we take a look at the customer side, trust and confidence in digital tools can seem as a big challenge. Indeed, customers can be hesitant to rely on digital tools and algorithms to manage their finances. For their customers to trust their digital platforms, banks need to provide financial advice through the usual banking app, which has already generated some trust. This challenge comes also with the fact that WM companies must also train their customers on how to use their digital platform most efficiently. And finally, when the customer is well trained and trusts the digital way of interacting, they may require access to support and advice outside of digital platforms, especially for complex financial needs. By addressing and overcoming these challenges together, banks and customers will both benefit from the implementation and adoption of hybrid-advisory models.

The hybrid-advisory approach is an innovative service delivery model that has the potential to transform the wealth management industry by offering a real alternative for wealth management customers. By combining the expertise of human advisors with the convenience and accessibility of digital tools, hybrid-advisory firms can provide customers with a more holistic and efficient wealth management experience. This approach can also help banks to reduce the costs associated with managing their customer portfolios, which can ultimately lead to lower fees for customers, and a broader range of customers served. However, financial institutions must be careful in designing their digital tools and services in a way that is consistent with their human advisory teams, and that meets the needs and preferences of their customers.

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