20170614 Hybrid Advice Hubbis VFINAL

A View on the Future – Hybrid Advice (APWR 2017 Teaser)

While the Asia-Pacific Wealth Report 2017 does not launch for another couple of months, I wanted to share some sneak peek early findings related to one of our feature topics (hybrid advice) to whet your appetites for what is to come. I shared these findings (and more) at a recent industry conference in Singapore.

Let’s start with the burning platform, which is that the majority of HNWIs would consider leaving their wealth firm for lack of integrated digital experience. Way back in 2014, 83% of Asian HNWIs stated they would be likely to leave their firm for the lack of a strong digital experience, integrated with the human/in-person channels such as the RM. Before you say this is just for the lower wealth bands, let me share the following (also from our Global HNW Insights Survey – the largest in the industry):

  1. Age: High attrition risk across age groups, though younger 86% vs. older 82%
  2. Gender: High attrition risk across genders, though female 85% vs. older 81%
  3. Wealth: High attrition risk across wealth bands, inc. 76% of ultra-HNWIs ($30mn+)

Digital is a long-discussed topic – what’s new? What’s different this year is that we want to focus on the business model of the future – where will all of this digital talk land? My view is hybrid advice built around personalized client journeys and new business and fee models, which we define as “Putting clients in the driving seat by allowing them to tap into life-stage and need-based wealth management and financial planning capabilities in a modular, personalized pay-as-you-go manner. These capabilities will be delivered through the amalgamation of a cognitive analytics-driven automated/self service delivery (such as for basic investment management), human-led delivery (such as for complex wealth structuring), or an advisor-assisted hybrid approach – As preferred by the client”.

Why do I feel this way? Because it is how clients want to engage with their wealth managers, in a manner similar to the experiences they get in other industries. Don’t just take my word for it though. Below we show 24 core wealth management capabilities for which we asked the preferred interaction/service approach across 1000s of HNWIs (from the WIP Capgemini 2017 APWR research program). The message is that you need a model to cater to an array of preferred wealth management journeys.

For example, one relatively young Singaporean HNWI values the advisor-led approach for up-front risk profiling and elements of wealth management, then largely wants a hybrid approach which is digital-led but advisor-assisted for a range of capabilities across the spectrum, and then finally also wants purely digital/automated service for areas such as research, simple investment management, and alerts.


Next we look at an Indian female HNWI with much higher wealth levels. Here we see the purely digital/automated capability does not feature, in keeping with her more complex wealth needs. However hybrid features across the spectrum, implying nonetheless a high degree of required digital capability.

 

Another Singaporean HNWI skews far more towards fully digital/automated, including for goals-based planning. The advisor-led components are really reserved for understanding his multi-banked wealth picture and more complex advice around estate planning and philanthropy. The rest is then hybrid.

I could show 1000s more examples (don’t worry, I won’t!). However the key message is that every single HNWI is different and will want to interact with the firm in their own manner, and firms therefore need a business and technology model that allows for this! There are lots of implications when moving to hybrid advice models for firms, from proposition and fee model evolution, to the technology architecture and process transformation required, to org. culture and how firms set themselves up to interact with start-up ecosystem, and to how investment budgets are built, among other areas.

In future posts I will show where firms are in their journey, and then once we launch the 2017 Asia-Pacific Wealth Report, we can dive into how firms can move forward and deliver value to themselves and HNW clients through hybrid advice models.

David

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