A few years ago, many in financial services thought robo-advisers would completely disrupt traditional wealth and asset management services at banks.
That hasn’t entirely turned out to be the case. In fact banks have begun to partner with, acquire or create their own robos in an effort to appeal to wealth management clients who want more digital services.
Although they have finally embraced wealth tech, banks now face the task of converting retail customers to use their own digital advisory services when there are so many options.
“That’s the big question,” said Christopher Bell, managing director of private banking at Cincinnati-based Fifth Third Bank. “We look at it like this: We want to make it easy to do business with us, and offer them the advice and technology that make them want to come on to our platforms.”
With that in mind, Fifth Third recently launched several digital wealth management products it hopes will compel retail customers to use their wealth and advisory services. One is its Life360 product, which combines human advice with a digital platform that gives customers a full overview of their financial life, including accounts and investments that aren’t held at Fifth Third.
“It allows them to see everything” that is part of their financial life, Bell said. “Clients want access to these types of services, and we want to provide them.”
This month, the bank began offering a new digital estate planning product called LegacyLink. The service, available online and through its own dedicated mobile app, provides educational content and interactive checklists around estate planning. The basic service is free and there is an additional paid-subscription service that helps users catalog, track and distribute estate assets.
“People are doing everything digitally now,” Bell said. “We want to provide them an experience similar to what they’d get at Amazon or Zappos or any of the top digital retailers.”
But managing people’s money is considerably different than selling them shoes or toilet paper. The key for banks is building out a good digital experience, but making sure it’s easy for people to connect with bankers when they need help.
Indeed, an Accenture survey published in March found that customers who relied on both digital tools and personal help were more engaged clients. The survey found that 64% of hybrid users seek out and receive assistance on financial planning, compared with 44% of those who rely either entirely on digital products or those who use traditional advisory services.
The place where banks need to improve is in determining when to be high touch and when to push self-service tools, said Michael Raneri, strategy and global fintech innovation lead for PwC.
“They need to do strategy work and better understand what are their clients’ behaviors and what are those key moments where a person might want a human interaction versus just technology alone,” he said. “They need a more tactical use of big data.”
That hybrid approach is exactly the strategy taken by KeyCorp in Cleveland. It is also looking to technology to entice a wider consumer base to adopt digital advisory tools. The bank last year rolled out a wealth management service called Key Wealth Direction, a digital portal designed to help private banking clients gain insights into their financial portfolio.
The portal gives clients some level of self service, like allowing them to track different accounts and investments in a dashboard, but also the ability to connect by phone to an adviser with the push of a button. The bank believes this mixture of technology and human service is the optimal way to attract people to use the platform.
“We consider it more of a collaboration tool than a pure technology platform,” said Veena Khanna, director of strategy and implementation for Key Private Bank, KeyCorp's wealth management division.
A major impetus for banks to change their approach to wealth is an attempt to build and retain relationship with the millennial generation. Along with those in Generation X, millennials are set to inherit some $30 trillion from the baby boomers in coming years. As well, millennials are starting to create wealth of their own.
“The younger generation likes a lot of the self-service technology, but when it comes to making major financial decisions, they still want to talk to someone,” Khanna said.
She added that as younger consumers may initially be drawn the product due to its tech capabilities, it will hopefully lead to using Key for wider wealth management services as they progress in life.
“We believe as net worth grows they’ll want conversations,” she said. “They’ll still use digital for some things, but will want to talk to our advisers for nuanced [financial] conversations.”
That’s a good strategy, as it may help customers who started by investing small money in a digital tool to stay with the bank throughout life rather than using another investment or advisory firm, Raneri said.
This means offering digital services beyond just the basic robo advisory app; for example conducting quarterly meetings via video rather than in person, or providing greater digital research tools to help clients make better investment decisions. The adviser would then still be available for personal interactions for large investment decisions or for consultations on major events that could affect the markets, such as Brexit.
“It’s moving to a digital experience with human support,” Raneri said. “Some interactions can be handled digitally, some by humans. Even the high-net-worth client doesn’t want to deal with an individual unless it’s something important.”