Wealth Management and Private Banking

15 July 2018James Goad

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Improvements in artificial intelligence and the growing use of algorithms are beginning to alter the way financial advice is delivered to end-clients. Just how far reaching digital adoption and the impact of automation will be on advisor client relationships remains to be seen, but the wealth industry must ensure they are at the forefront of digital adoption.


  • Improvements in artificial intelligence and the growing use of algorithms are beginning to alter the way financial advice is delivered to end-clients. Utilisation of algorithmic technology will likely develop from specific tasks, such as portfolio allocation, to fully-fledged turnkey solutions.    
  • Market participants were highly receptive to the concept of ‘behavioural coaching’ as a method of exemplifying the added value of a human adviser. Delegates feel that this form of interaction represents the foundation of how to manage clients’ assets most effectively.  
  • Client segmentation is an important strategy in proficiently aligning the digital proposition of a wealth manager with its intended market. The pricing of services, as well as the degree of adviser engagement, represent important indicators in judging the appropriate utilisation of digital tools. 

 Key issues and challenges:

  • The roundtable discussion began with an outline describing how the financial advisory business in the UK market is beginning to be shaped by the growing deployment of digital technology.
  • Delegates agreed with the expert’s assertion that the correct application of automation and digital technology is a function of how firms price their services, and the degree to which their advisor force engages with end-clients.  
  • Firms which operate a service model centred on the advisor interacting directly with the client require less digital services, and thereby charge a higher advisory fee. On the other end of the spectrum, some businesses in the UK have chosen to fully embed digital technology as part of the advisory service, with the benefit of charging a lower advisory fee for services.
  • However, some participants noted that this catalogued view needs to be expanded to take into account the different service requirements of differing client types. While the propensity for digital services is typically said to be demanded by millennials during the accumulation phase, this does not mean that automation and digital services need to be rendered obsolete for other client segments. After all, participants agreed that nearly all clients neither want nor require constant human interaction to meet their wealth management needs.  
  • Yet, despite increasing pressure on fees and growing costs for wealth managers in the UK, firms relying on automation to service end-clients may not always achieve the most optimal financial outcomes for customers. Delegates noted the conceptual benefits of behavioural coaching and advising clients during volatile market conditions – something a robo-adviosry solution could very well struggle to match or threaten.      
  • All participants agreed that coaching and advising clients about their wealth requires a certain degree of trust between both parties.
  • Gaining the trust of clients was said to be beyond the realm of automation and technological algorithms, showcasing the high value of human interaction.
  • However, while behavioural coaching can add significant value to the client relationship, advisors need to receive the correct training to utilise these soft skills.
  • This is especially true when selling a holistic proposition to clients before an important event which justifies these needs. Participants agreed that achieving this is difficult, and gaining the full trust of clients is a long and patient process.
  • The conversation shifted briefly to the impact of robo-advisory platforms on the UK wealth management market.
  • Some delegates were explicit in noting that some robo-advisors had failed to achieve the appropriate scale to challenge more conventional providers in the market. Other participants highlighted that the industry is still in its infancy and growth phase.
  • However, attendees concluded that the efficacy of the robo-advisory model has yet to be properly tested with full-blown market correction as occurred in 2008.

Conclusions and solutions:

  • Automation is likely to challenge advisors who position their value proposition on low-value services, such as portfolio allocation.
  • Human services, such as behavioural coaching, can add significant value to the client relationship, but require large degrees of trust to implement.    

Expert: Garrett Harbron, Vanguard