Wealthy Investors Are Disloyal, Eager to Try New Technology: Cisco Survey

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A survey Cisco released today plays well into its ambitions for equipping bank branches and call centers with its videoconferencing technology. But although the survey is self-serving, the results are interesting.

The poll of 1,243 wealthy investors in the United States, United Kingdom and Germany with at least $500,000 in investable assets (Cisco used lists from Global Market Insite) found that they do not have loyalty to their financial advisers and are interested in more technology options in their adviser relationship.

According to Cisco, wealthy under-55-year-old investors represent a $31 billion revenue opportunity and already account for 40 percent of global investable assets. This share is expected to increase as they age and as they inherit assets from older generations during the next 10 years.

The lack of loyalty came out when Cisco asked investors how willing they were to switch financial advisors. Among respondents under 55, 57% were willing to move assets to firms that provide technology-based services that incorporate visual, virtual, social, mobile, blog and webinar activities. And 20% said they expected to make a change of primary advisor in the next 12 months.

Undoubtedly one reason for this fickleness is the pathetic rates of return investors have been getting. According to Dalbar, the average investor earned 2.1% over the twenty-year period ended December 31, 2011. It's no wonder these people are looking for a change.

A majority -- 63% -- of those under 55 said they would like to meet with their financial adviser using videoconferencing in a bank branch. And nearly as many, 62%, say they would be game to try communicating with their adviser using videoconferencing from their own PC at work or home. Among the over-55 set, all bets are off -- these numbers are much lower.

The under-55 set already use technology in their investing activities. About 71% use a PC to check or manage their investments at least once per month (36% do so daily), while 28% use smartphones and 24% use tablets. About half (49%) of wealthy investors consider themselves to be "early adopters" of technology or in the "early majority" of those who use new devices and services.

"The first bit of research was around the appetite among investors for new models of advisory firms, and how long it would be before people would start to use some of these capabilities," says Robert Waitman, director, global financial services practice at Cisco. "We found a group of people under 55 who were engaged and active investors, not loyal but interested in using technology in new ways."

For a bank, videoconferencing can produce a few benefits. One is the ability to centralize resources, having financial advisers (or small business bankers or mortgage specialists, for that matter) work from a call center or other central spot, or even from their homes, and meet with clients remotely, thus cutting travel expenses and deal time. Another is the ability to engage with the customer in the moment they're interested in a financial matter, even if there are no advisers around.

The survey also asked wealthy investors what types of devices they would prefer to use videoconferencing from. "The interest level is highest for the larger form factors," Waitman reports. About 63% said desktop computers would be their preferred medium. The second choice, at 55%, was a high-definition videoconferencing system at a branch. That was followed shortly by tablets at 50% and smartphones at 44%. "People aren't looking to have trusted, deep, important conversations over a device that fits in their hand," Waitman surmises. "Tablets could be in between, especially if the quality is good."

Some of the comfort level with videoconferencing seems to come from the way investors use video in their personal lives: more than 55% of all those surveyed had used video in the past year to connect with a family member, friend or colleague. "This was the biggest predictor of whether they'd be interested in this video experience, either remotely or in the branch," Waitman says. "The overall message is that people are using these capabilities in their everyday lives and financial services have to keep up with that."

Another factor is geography. About 22% of the wealthy investor respondents live more than 50 miles from their advisor. These clients tend to meet with their advisors less than once a year or never. "Financial advisors all say they have a bunch of clients who are like that, whatever tools they can get will be better than nothing. A face to face conversation lets them build trust," Waitman says.

Another factoid of interest to banks with wealth management groups: The study found that more than 27% of U.S. wealthy investors don't have a financial adviser at all. More than two-thirds of these people report that they would consider hiring one under the right circumstances.

The survey also found that wealthy investors' assets are fragmented across multiple firms. In the U.S., 77% have assets across more than one firm and 36% have investments with four or more firms.

Only 29% of the under-55 group in the U.S. trust the investment advice they receive from financial advisers more than that of their fellow investors.

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