The Rise of the Digital Advisor

High net worth individuals have more choices than ever when it comes to managing their assets. It is also becoming increasingly easy for them to reallocate assets between asset managers. Larger asset management firms are threatened by the growing number of fintech startups that are delivering high quality advice at a fraction of the cost. In response to this pressure, established industry players are investing heavily in technology and opening up their platforms to third parties.

The majority of experts agree that the asset management mechanics will soon be fully automated and performed entirely by computers powered by heuristics, big data, and deep learning. As a consequence, the quality of client experience will become the main factor determining the success of client acquisition and retention efforts at asset management firms of any size.

The client engagement process in the asset management industry has not changed in decades. A prospective client is taken through a questionnaire that is used to build an investment profile. This profile is used to design a personalized investment strategy. An investment advisor communicates and tweaks this strategy repeatedly until the client is comfortable enough to commit the assets, at which point they are allocated across a number investment portfolios. The client meets with the advisor periodically to review progress and adjust goals.

The biggest innovation in recent years consisted mainly of replacing the human advisor with a robot and using online reports in place of in-person meetings. This change may be welcome by some, but it will not be suitable for the majority of high net worth individuals. According to a recent survey, while 55% of them would readily change their advisors based on the level of technology sophistication, over 70% are still uncomfortable with entrusting management of their assets entirely to a robot, especially in times of crisis.

We believe, therefore, that instead of excluding human beings from the client engagement process, the focus of innovation in the asset management industry must rather be on creating the tools that help advisors raise the quality of service and client experience to a radically new level. Based on experience in other verticals, these tools can be grouped in the following categories:

  • Information management and integration
  • Secure mobile and online information access
  • Collaboration and business process automation
  • Digital communication and presentation tools
  • Organizational learning and analytics

Paperfin is a comprehensive client engagement platform that is delivering best-in-class tools in each of these categories. The platform is at work at some of the world’s largest organizations where it is helping teams of financial services professionals stand out from the crowd, provide exceptional service, and deliver consistent growth for their clients and companies.