Digital distruption in UK wealth management
24 October 2016 | Topical insights
Janine Menasakanian: Digital disruption in UK wealth management. The world of wealth management is about to be broken up and rebuilt by the digital revolution. What would it look like? What do wealth managers need to do? My name is Janine Menasakanian, Head of Wealth Management at Vanguard Asset Management. I have with me Peter Neufeld, a partner at Ernst & Young and Head of Digital Customer Experience.
So, Peter, tell us a little bit about what's happening in this world, and what we need to be aware of?
Peter Neufeld: Great, well, I think we're seeing a lot of change in how consumers want to use technology to go about living their financial lives. We have access to more information than we've ever had before. We can find out things about different products and services. We can find out what our friends are doing, what our families are doing, and we can use these powerful new tools, these powerful new technologies, to make better financial choices and decisions. That puts a lot of pressure on wealth managers to get more relevant in the financial lives of their customers and in the digital lives they're leading as well.
Janine Menasakanian: And we often hear about this new empowered millennial customer leading the way with this disruption. Is that really the case? Can you tell us a little bit more about what's driving these changes?
Peter Neufeld: Yes, I think we're looking at a younger generation who've grown up with an expectation that everything's available through some digital interface. They can get access to information, real time, any time. This puts a lot of pressure on traditional financial organisations where we might have legacy technologies, legacy systems, legacy procedures that take a bit more time to get the information out there that people want. And as these younger people move into different life stages, as they create and generate their own wealth or inherit wealth, or have different life events, they're going to bring those same kinds of demands to the wealth manager. And we're seeing that already. And many of the wealth managers themselves are also coming from that same generation. Technology is going to play a big role.
Janine Menasakanian: And can you share with us some of the practices you've seen?
Peter Neufeld: Well, I think solutions that are out there helping people and their families understand their financial choices and financial options, bringing some clarity to some of the complexity in our financial lives. If you think about pension reform, for example, there's a lot of questions about what that might mean for me, for my family. People in the marketplace, consumers, want better insight, better understanding. The people out there that are using technology and digital to educate them, to help them make better financial choices for themselves and their families, those are the ones that I'm really excited about, and I think are going to have a really big impact over the long term.
Janine Menasakanian: And if you're a wealth manager where do you start if you haven't already?
Peter Neufeld: I think if I was a wealth manager I'd want to use digital to understand my customer better, to understand my clients more deeply, to use it to really help them make better choices, and I want to engage with them. I could use Facebook to see when they're having kids or when they're going on holiday. I could use LinkedIn to see when they're changing jobs or getting promotions. I could use that information to really help provide the right kind of insight. And my clients are going to expect that from me. And then also as a wealth manager I probably want to grow and expand my business. I want to get more people to trust me to help them have the financial future they're looking for. So I want to use technology to get more efficient at doing my job.
Janine Menasakanian: So, where next for them?
Peter Neufeld: Well, I think right now you need to start embracing it. You need to start understanding how technology can help you grow your business, help you get closer to your customer. It'll help you have more clients that you can be closer to than ever before. We really need to get smart about how we use that technology, because the face-to-face interaction around complex financial life planning, I don't think that's going to go away. But if we're not providing value to the customer through that digital channel, we might lose our ability to engage with them, or the permission they give us to.
Janine Menasakanian: Thank you, Peter.
Peter Neufeld: Well, thank you very much.
Janine Menasakanian: Automation, social media, increased efficiencies, opening out new markets and retaining existing clients. There's a lot for wealth managers to understand if they're to surmount the challenges and seize the opportunities of this new fast approaching digital world. Peter Neufeld, thank you.
Peter Neufeld: Thank you.
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