Wealth Management and Private Banking

14 July 2018James Goad

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The future of investment advice remains a subject of continued debate following the ever increasing utilisation of digital automation by financial institutions. Ultimately, firms must adopt a balanced service model, determining exactly which elements of the proposition to automate in conjunction with the human element of personal advice and overcome hurdles in terms of legacy IT systems.


  • Delegates were in agreement that the narrative surrounding the digitalisation of investment advice has shifted from one focused initially on the efficacy of robo-advice, to one hinged on whether such tools should be fully automated or encompass a more hybrid solution for customers.
  • Market participants were adamant that when it comes to the pertinence of robo-advisory services, the generational divide between consumers is a key influencer in how investment advice is likely to change in the future.
  • Moreover, a key stumbling block which emerged from both sessions centred on how to maintain a consistent level of trust with clients bearing in mind the growing utilisation of automation.

Key issues and challenges:

  • Clients’ growing preference for digital channels is continuing to influence wealth and asset managers’ service delivery models.
  • The discussion coalesced around the emergence of two alternatives to the traditional advisor-based wealth management proposition; a fully automated digital wealth manager, or a hybrid solution encompassing digital automation in conjunction with an advisor-assisted element of interaction.
  • The general consensus amongst delegates was that the combination of an advisory service offering both human and digital interaction – the hybrid model – is the most attractive solution in terms of meeting the demands of consumers and tapping prospective growth moving forward.
  • The hybrid model’s appeal relates closely to the customer’s continued interaction with a financial advisor. The general consensus in the room was that despite the growth of automated investment advice, the importance of the human element remains pivotal, especially in harboring or maintaining trust with customers.
  • Another important reason behind the growing demand for automated investment advice is the changing expectations of tomorrow’s clients.
  • The ever increasing digitalisation of society will only induce increased pressure on wealth managers to meet the normalised needs of future clients through better digital channels.
  • More explicitly, participants anticipate that future clients in need of investment advice will almost certainly expect some degree of digital interaction with respect to their investments, rather than a purely face-to-face exchange with a financial advisor.
  • A noticeable portion of delegates broached the topic of millennial customers’ expectations from a different angle. Some noted that the only reason millennials are more likely to use fully or partially automated wealth management platforms is due to an inability to afford face-to-face investment advice, and not merely due to millennials’ infatuation with technological innovation.
  • The argument posed by these participants hinged less on the importance of technology as a disruptive force, and more as a secondary tool enabling the industry to better service a wider market of prospective ‘advice orphans’.
  • Throughout the session a number of delegates generously provided tangible examples of the difficulties their firms have experienced when attempting to adopt new digital tools more generally. One delegate noted the incessant hurdles involved in implementing a standardised market platform across multiple jurisdictions from a financial and operational perspective.
  • This issue of legacy IT systems remains a key stumbling block for established market players; an obstacle that clearly appears to be less of an issue for challenger firms.
  • In addition to this, the conversation expanded further, touching on the human impact of increased automation. Some delegates were keen to express the opinion that new technology entrants in the market will not result in the total eradication of financial advisors or the human element more broadly. If anything, it could very well enhance the demands on financial advisors to justify the incremental service they provide, which consequently, is likely to increase the talent requirements for financial advisors in the future.

Conclusions and solutions:

  • The increasing proliferation of digital wealth management advice represents a growing trend in the industry to service the needs of mass affluent clients unable to afford face-to-face investment advice.
  • Trust remains an important pillar in the relationship between clients and their investment management firms; maintaining this in the face of growing automation remains a key challenge for firms.
  • Ultimately, firms must adopt a balanced service model, determining exactly which elements of the proposition to automate in conjunction with the human element of personal advice, grappling with existing hurdles in terms of legacy IT systems.
  • Incumbents no longer see fintech as a threat but as an opportunity to further improve their service offering for clients. Moreover, many incumbents in the market are now actively engaging with robo-advisory services themselves, either through acquisitions, joint partnerships, or even through building platforms from scratch


Experts: David Aston and Jann Ewehart, EY                        ey-414-x-276.png

Facilitator: Alex Johnson