Page 29 - Investment Advisor June 2022

Rolling out the more sophisticated products no doubt could
“strengthen loyalty and profitability, but it will also pose sig-
nificant challenges.”

Integration of people and technology.
3 A “majority of wealthy clients” plan to access more
advice through digital tools going forward, the authors state.
Thus, firms will have to improve technology interfaces and meld
them with human advisors.
Getting this blend right means providing “high-value omnichan-
nel advice in real time.” EY believes this will be difficult because it
means firms must “incorporate” digital with tech-enabled remote
advisors, but this should not only improve advisor performance but
also lower the cost of serving each client, the paper states.

The use of data and technology in advice generation.
4 Despite advances made in digitizing advice delivery, there
links between the fees and data that clients provide, and the is much to do in improving “advice itself,” the report states.
service and value that they receive in return.” Asia-Pacific (65%) and millennial (78%) investors believe
There are four “strategic themes” that EY states will shape digital tools have improved decision-making, according to EY. In
the future of advice: North America, only 51% believe so and 34% are neutral. Men
(59%) are more likely to believe so than women (51%), while
The disruption of current client expectations. the very high-net-worth (68%) and UHNW (66%) believe digi-
1 This includes developing “personality portraits” that tal tools have improved their decision-making.
will help in understanding client needs and better shape mod- That means many aren’t a part of this transition. Therefore,
els to accommodate them. These must also be adaptable to firms will have to take client data and, with AI, “generate
changes in client investment goals, ethical beliefs and digital insight-rich advice.”
appetites, which differ across the board. “Harnessing the power of personal data will be critical,” the
For example, financial education and training is easier to do report states. Although clients may be willing to share data, the
through digital learning, while retirement planning advice is firm will have to explain how it will be used and how it will ben-
less so. Further, baby boomers might lean more toward self- efit the advice and services clients receive.
directed investment than millennials, although the latter are
more open to digital adoption. Firm Imperatives
The paper suggests that firms will begin to use artificial To make these changes, there are imperatives that firms must
intelligence to “interpret behavior, identify emotional insights put in place.
and meet the right needs at the right time.” The first is identifying a model that will be used to deliver bet-
ter client experiences. To do this, firms will need to:
The democratization of advice. • Develop a strategic framework.
2 There will be a growing demand for more sophis- • Build an ecosystem of compatibility and flexibility, or how to
ticated products and services for mass affluent and high- interact with partner networks.
net-worth segments, the paper states. This includes a move • Set up service architecture for delivery of advice.
toward direct indexing, private assets, fractional ownership • Identify regulatory requirements and compliance.
and tokenization that provides tradable access to private The second imperative is to make the investments needed to
markets and physical assets. achieve the desired model. Technology is key here, as is greater
For example, 81% of ultra-high-net-worth investors have diversity in products and experienced talent.
active funds, while 59% of HNW and 50% of the mass afflu- Finally, there must be the right advisor training, close engage-
ent do. Only 14% of the mass affluent use alternative invest- ment between business units and clear communications from
ments, compared with 81% of UHNW investors. leaders to accomplish these goals.
While only 14% of mass affluent investors use financial “Maintaining organizational agility and flexibility is a particu-
education, that is more than the very high-net-worth group larly important priority, and one that is often underappreciated,”
(11%) and just below the UHNW (17%). the authors conclude. —Ginger Szala

JUNE 2022 INVESTMENT ADVISOR 27