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Mark Trousdale, InvestCloud

Designing digital advice for HNWIs 


By Mark C Trousdale (pictured), Chief Growth Officer, InvestCloud – Digital advice has transformed the way investors interact with and manage their wealth. But it is still under-used by wealth managers. 

By Mark C Trousdale (pictured), Chief Growth Officer, InvestCloud – Digital advice has transformed the way investors interact with and manage their wealth. But it is still under-used by wealth managers. 

It is often perceived as the domain of robo-advisers, or something designed for mass-market and mass-affluent investors. It is the first step on a – typically younger – investor’s journey to maximising wealth. This is a misconception. 

Re-designing digital advice 

Digital advice should be engineered to serve high-net-worth individual (HNWI) demographics.  

It is well placed to mitigate the threat of fee compression by allowing managers to serve more clients while service levels are improved. It also helps prepare for wealth transfer to younger, often more digitally savvy clients. 

But this can only be achieved if aligned to the right strategy. It means greater automation, increased client responsiveness and thus better profitability. 

Defining digital advice  

There have been numerous digital advice strategies deployed, but no clear winner in the HNWI space. 

This is because many are asking the wrong question. They are focused on deciphering which single model is best suited to needs. They should instead ask how they can create experiences that speak to the individual. They need digital empathy. 

This is done by developing a series of granular personas to provide the functionality and experience that speaks to individuals sharing a set of common characteristics or goals. This then shapes the experience, advice and level of services they receive from the wealth manager. It means everything is tailored according to how the client wants to interact with their wealth.  

The number of personas varies greatly depending on the level of investment from a firm in developing its digital experience and the diversity of its clients. But for those beginning their digital journey, there are three key personas to develop. 

The self-selector 

Many investors are increasingly hands-on. This demographic knows the financial markets and wants to be more involved – or even self-sufficient – in the investing process. This is the self-select investor. 

Education and curated access are crucial, as are the tools to browse and research investment solutions to allow them to create their own models. Intuitive and flexible self-select investing tools are also a requirement. But the wealth manager must stay front of mind.  

Investment options should be curated such that investors can explore in different ways – by topic, trend or through insight into what their communities are selecting.  

Communication must respect their mindset by offering a variety of channels: chat, video chat, secure messaging, voice memos. Communication will be on their terms – not yours.  

The goals-based planner 

For the planning persona, it isn’t about complex functionality. These people need a service that considers all aspects of their financial wellbeing.  

Their primary need is holistic, goals-based planning for all life events. Outside of whether they align to their own personal beliefs, such as ESG, investments are a means and not an end. So, it is about how they translate investments into achieving life goals.  

For this persona, digital advice starts with empathetic discovery. This means digital workflows that clarify investment goals: what they are trying to achieve and why, alongside the specific requirements. This goes down to understanding goal funding, risk-return trade-off preferences and a whole host of other factors.  

Advice must consider the whole person in this case. It’s essential to capture total assets and liabilities, income and expenses, project cashflows and apply stochastic models. They need constant communication to keep track of their goals and to keep them on track. 

The traditionalist  

There will always be a client segment that naturally prefers the more traditional, “white glove” services offered by prestigious wealth managers. Digital still has a role to play here. 

Typically, these are ultra-high-net-worth individuals (UHNWIs), or those at the higher end of the HNWI spectrum. They require assistance from their adviser and like receiving formal proposals before deciding to invest. Here, the adviser is in the driver’s seat.  

This demographic usually requires a great deal of customisation to service well. This makes automation key – minimising the effort required to allow advisers to focus on maximising profitability and tasks that add value.  

Automation requires digital advice builder tools, to give the wealth manager ultimate control to tailor the financial product solutions to the client’s planning goals and allowing them to be presented in the most empathetic way possible in a formal, beautiful proposal.  

Enhancing digital advice  

We have the theory. But how do we make digital advice stick with clients? 

Gamification, behavioural science and decision theory are all useful practices to put in place to achieve this goal. It may sound lofty and ambitious, but these break down into a series of dynamics that encourage positive behaviours from clients, while building greater trust and loyalty. 

Take the self-select investor as an example. We know that one of the primary challenges is keeping the manager and wealth firm front and centre for the client without being unnecessarily high touch. Gamification principles tell us that we can encourage greater and more active participation by establishing communities to help investors progress and learn.  

Similarly, for the planning persona, wealth firms can look to implement progression dynamics – where an investor is “rewarded” by entering more relevant information or by completing certain actions within a desired timeframe. Here, we can also use the framing dynamic of decision theory to ensure investors stay fixated on the end goal and do not get distracted by the wrong things, such as a slight dip in their portfolio. 

All these dynamics go to further the level of digital empathy a wealth manager can offer to clients. This in turn keeps them loyal, engaged – and profitable.  

A winning formula 

Along with using the right platform and technology partner, a smart digital advice strategy that uses gamification, behavioural and decision theory dynamics is a winning formula.  

Wealth managers who are already harnessing automated digital advice to open new revenue streams can easily switch to capitalise on using the same elements for HNWI segments. For those wealth managers looking to service clients more effectively and protect existing revenue streams, digital advice is well placed to do all of this – so long as they move quickly to take the competitive advantage. 

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