The Futurewealth Report: Helpful investment technologies for wealthy HNW investors
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The Futurewealth Report: Helpful investment technologies for wealthy HNW investors

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New research released by SEI (NASDAQ: SEIC), Standard Chartered Private Bank and Scorpio Partnership shows that only 49% of the world’s wealthy feel the investment technologies used by their wealth ...

New research released by SEI (NASDAQ: SEIC), Standard Chartered Private Bank and Scorpio Partnership shows that only 49% of the world’s wealthy feel the investment technologies used by their wealth manager are appropriate to their needs. In particular, clients feel their wealth manager’s technology lets them down in the ‘discovery phase’, with only 40% of the Futurewealthy stating their provider’s technology helps to show them how to invest their money.

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The Futurewealth Report: Helpful investment technologies for wealthy HNW investors The Futurewealth Report: Helpful investment technologies for wealthy HNW investors Document Transcript

  • ©2013 Scorpio Partnership. All rights reserved | 0The Futurewealth Report 2012-2013Helpful investmenttechnologiesPart 3February 2013
  • ©2013 Scorpio Partnership. All rights reserved | 1FOREWORDThis is our third foray into the thoughts of the world’s wealthy on the subject of new technology.For us, it is also the most telling. In this paper, we explore what makes investment technology“helpful” in the eyes of the Futurewealthy.What we find is that wealth managers may not always get it right.Futurewealthy clients acknowledge that the technology wealth management firms use forexecuting transactions and reporting is broadly appropriate. However, their responses alsosuggest that much more emphasis needs to be placed on getting technology right in what wemight call the discovery phase. This phase is about understanding the client, finding out abouttheir needs and demonstrating the investment strategies most suited to achieving their financialgoals.While this may not be comfortable reading for those of us in the industry, the views of 3,477 of theworld’s growing affluent population cannot, and should not, be ignored.This process is absolutely central to building a successful, lasting partnership with our wealthyclients. So, the message that we could do more to support these processes with different kinds oftechnology is received loud and clear.It is also interesting to see how our future clients are using technology to weigh their investmentoptions before they make financial commitments. Again, this highlights the need for us to fit morehelpful content into their information ecosystem to support their decisions.There is certainly much to think about in this research, especially as we all move ever further intothe digital age.So, once again, we would like to thank the Futurewealthy who took part in this research and forhelping us understand what has to be done to meet their needs.Sebastian DoveyManaging PartnerScorpio PartnershipShayne NelsonCEOStandard Chartered Private BankAlfred P. West, Jr.Chairman and Chief Executive OfficerSEI
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 1IN BRIEFIn this third paper of the 2012/2013 Futurewealth series, we explore what constitutes “helpful”investment technology in the eyes of the Futurewealthy. More specifically, we ask what more canwealth managers do to help those who are on the fast track to wealth creation to manage theiraffairs more efficiently and become the partner of choice to support their financial decisions.We also look at the tools the Futurewealthy rely on most to engage with firms throughout theinvestment process; we ask how wealth managers are doing when it comes to delivering high-quality investment technology; and we explore the information and devices the Futurewealthy useto manage their money easier.What we find is a far cry from a ringing endorsement. While wealth management firms, in general,are not doing a bad job, per se, they are not doing a good job either. It seems much of theirtechnology effort goes on executing and reporting back to clients, but this is at the expense ofdrawing clients into the investment process early on through technology channels. In otherwords, the technology may work well mechanically, but fails to connect at a personal level.As with the two previous papers in this series, the findings are based on the views of 3,477 of theworld’s high-net-worth population with an average worth of USD1.9 million. In the earlier papers,we found this group of wealthy individuals are highly digitally adept. It therefore comes as nosurprise to find their expectations are equally high with respect to investment technology.A tipping pointJust under half of the Futurewealthy feel the investment technology used by their wealth manageris appropriate to their needs. More specifically, they believe the technology is good enough whenit comes to the execution of investment business and viewing their account holdings, but in thediscovery phase it just does not measure up.The picture in the Americas is marginally better. But, in Europe, and particularly in the Asia Pacificmarkets – where digital dexterity is at its peak, there is an urgent need for an upgrade.Information polygamyThis upgrade needs to reflect the changing information world of the Futurewealthy. In this world,the thoughts of other investors have almost as much influence on their investment decisions asthe views of their wealth manager. Ratings, reviews, news articles and price comparison sites areall widely used by the Futurewealthy to confirm the course of their investment activity.Go-go money managementWhich means, in the world of the Futurewealthy, helpful investment technology is not just safeand practical. It is informative, intelligent and, above all, it is state-of-the-art. It delivers news,knowledge, choice and ideas. It intersects with other systems and applications. It informs usingthe views of others. And, it does all this whenever, wherever and on whatever device theFuturewealthy have on hand.
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 2Being right half the time is betterthan being half-right all the timeIn brief It may be the 21stcentury, but today just 49% of the world’s up-and-coming wealthy aregenuinely satisfied that their wealth manager delivers all the appropriate investmenttechnologies to meet their needs. This figure rises to 59%, when it comes to the technology used to execute investmenttransactions. But, it falls back to just 40% when the world’s Futurewealthy look at thetechnology wealth managers use to show them how to invest their money. America’s wealthy are generally more satisfied with their wealth manager’s use of technology.Here, 57% feel the solutions on offer are appropriate to their needs. By contrast, in Europe the state of affairs is far worse. Only one-third of Europe’s fast-trackersbelieve their wealth manager has the right technology to provide them with the news andviews they need to put their money to work. Meanwhile, in Asia – where the technology dexterity of the up-and-coming affluent faroutpaces the rest of the world – only around half of the Futurewealthy believe the investmenttechnology from their wealth manager is really up to par.SOMETIMES AN IDEA CAN TIP, JUST BY CHANGING THE CONTEXTIf our research into investment technology among the world’s Futurewealthy highlights anything, ithighlights there are big risks with being half right, because being half right often causescomplacency, when it really should be an ultimate tipping point. And, when firms are dealing withthe world’s emerging elite, complacency is not an option.As part of this series on the digital habits of the world’s Futurewealthy, we asked what they reallythink about the state of investment technology from wealth management firms with whom theywork. Their answers suggest that if wealth managers want to capture the imagination of theirmost valued clients, then it is time for a reboot.More specifically, we asked the Futurewealthy about five different types of investmenttechnology. Their answers suggest they feel wealth managers do well at what they do best:investing money. But, when it comes to connecting with them, and inspiring them, and showingthem how it is done, wealth manager technologies are more geek than sleek [Figure 1].
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 3Figure 1: Quality of advisor technologies (by worth)Do you feel your main financial provider delivers appropriate technologies to do the following?In fact, just 49% of the world’s Futurewealthy indicate that current investment technologies areappropriate to their needs. The upper echelon seem to be better catered for, but even among thiselite group satisfaction levels only average 59% across the various technologies.However, overall satisfaction levels drop to 45% among those Futurewealthy clients who are stillbuilding their nest eggs. In fact, one in nine of this upwardly-mobile group is positively grumpyabout the way investment opportunities are presented to them.Sentiments around the world are similar. Wealth managers in the American markets appear to bedoing a little better, but in Europe and in Asia only between one-third and a half of wealth creatorsbelieve wealth managers have the right tools to tell them what to do with their money [Figure 2].If you add to the mix that the Futurewealthy in the Asia Pacific markets are most on the front footwhen it comes to technology adoption, these results are far from a ringing endorsement.Taken together, it seems the landscape of investment technology is much like the famousskylines of these three great regions; there are some beautiful highs, but also some less-attractivelows.
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 4Figure 2: Quality of advisor technologies (by region)Do you feel your main financial provider delivers appropriate technologies to do the following?HighsLows% who say theirwealth managerhas appropriatetechnologyThe Americas Europe APAC50%41%57% OverallExecute transactions69% 56% 57%Provide informationabout my completefinancial picture58% 43% 51%Access knowledgeabout particularinvestment options48%38%57%Access news onproducts and markets53% 38% 50%Demonstrate portfoliostrategies42%29%49%
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 5LOGIC MAY GET YOU FROM A TO B, BUT ONLY IMAGINATION CAN TAKEYOU EVERYWHEREThese could-do-better scores beg the question, what are the expectations of the Futurewealthywhen it comes to investment technology? Because, one of the greatest challenges of thetechnology age is its infinite realm of possibilities.As we have seen in earlier papers, the Futurewealthy find this myriad of possibilities very exciting.But, at the same time, they have their feet firmly planted on the ground – especially when it comesto their money.They do not necessarily expect their wealth manager’s technology to be cool, cute or complex.But, by the same token, focusing on what is appropriate should not exclude what is intelligent.Furthermore, what is safe and practical should also be dynamic and innovative, and maybe evena touch exciting [Figures 3 & 4].Indeed, by asking the Futurewealthy the qualities they would like to see in their wealth manager’stechnology, we find they expect strong foundations. But, they would not mind someone hittingthe refresh button and allowing wealth managers to think again at how investment technologycould dare to delight.
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 6Figure 3: Current investment technology characteristicsHow would you characterise your main financial provider’s CURRENT use of technology?Figure 4: Desired provider technology characteristicsWhat are the qualities you would LIKE TO SEE in your main financial provider’s use of technology?
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 7OUR GREATEST STORE OF INFORMATION IS IN OTHER PEOPLEIf the Futurewealthy think their wealth managers have been in power-down mode while thetechnology revolution has been taking off, then it is not without good reason.We must remember that the Futurewealthy are information mavens – experts in sourcingknowledge from a wide web of connections. And so, when it comes to making serious investmentdecisions, they have the world at their finger tips.Their wealth manager may want the kind of personal relationship that makes them a partner inmoney matters, but the Futurewealthy are by no means information monogamists.Rather, as each individual becomes a broadcaster andeach consumer joins a cohort of co-consumers, eveninvestment decisions are co-sourced.The Futurewealthy may value the opinion of their wealthmanager when it comes to investments, but theircredentials will be checked and re-checked throughdifferent filters before a decision is reached.In fact, on a one-hundred point scale, we find ratings, reviews, search engines and pricecomparison sites feature almost on par with a wealth management firm’s own information outputwhen the Futurewealthy assess how to invest, and with whom [Figure 5].Figure 5: Influences on investment decisions (by worth)When you made your last investment, how influential were the following factors in your decisions to workwith a particular financial provider?#FW2012/2013Those worth over USD4 millionplace about three times as muchimportance on their wealthmanager’s blog posts and socialnetworking presence compared tothose with less than USD500,000
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 8Once again, we find it is the wealthiest of the Futurewealthyfor whom these different digital touchpoints are a key partof their decision framework. These self-starters cast a wideinformation net to ensure their investment choices makesense.Those in the Asia Pacific markets are also avid co-consumers for whom digital channels provide vitalvalidation of their investment decisions [Figure 6].Figure 6: Influences on investment decisions (by region)When you made your last investment, how influential were the following factors in your decisions to workwith a particular financial provider?#FW2012/2013A firm’s social networking presenceis about three times more importantto Asia’s wealthy when deciding onan investment provider than to thosefrom Europe and the Americas.
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 9ONLY CONNECT THE PROSE AND THE PASSIONSo, it seems when the Futurewealthy consider how to invest their hard-earned capital, they do notjust rely on their wealth managers, but on a whole information ecosystem. In this onlineenvironment, wealth managers will increasingly need to stand out if their opinions are to be heardand valued.Joining the information fray is undoubtedly a giant step for firms that root their service ethos inthe delivery of financial solutions that are deeply personal. Yet, for those that want to keepconnecting with their most valued customers, it seems the time has come to define howtechnology can be used to empower those relationships and take them forward into the future.You could call this user-friendliness, but the real opportunity lies in redefining service – with a .And, while some wealth manager types seem tobe getting to grips with online channels betterthan others, with an average performance scoreof 56 points, there is once again significantroom for improvement [Figure 7].Figure 7: Quality of wealth manager delivery through online channels(by provider type)How good was your financial provider at using online channels to deliver their services?#FW2012/2013When it comes to online information, wealthadvisors are beating private banks by 7performance points, and banks by 11 points.
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 10Part of this challenge will lie in complexity. As we have already seen in this series, theFuturewealthy typically have at least three digital devices and all of them are important in theirinteraction with wealth managers. Which means, they do not just want service with a smile; theywant it on the go.Laptops top the list of devices the Futurewealthy use to connect with a wealth manager, butsmartphones, iPads and Blackberrys are not far behind. These technologies are no longer a nice-to-have novelty; they have become part and parcel of the way the world’s wealthy organise theirlives, albeit as secondary communication tools in their financial relationships [Figure 8].For those who provide financial services to the Futurewealthy, this means informationmanagement – and indeed even relationship management – is getting much more mobile.Figure 8: Digital devices used to connect with wealth managersWhen it comes to communicating with your financial provider about your investments, which of thefollowing devices are important? (Percentage of respondents who stated the device was important)
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 11And no surprises, once again it is those with the most get-up-and-go, who are getting up andgoing the most. In fact, 74% of the richest Futurewealthy already use the mobile and tablet appsoffered by their wealth manager, compared with just 35% of those whose current wealth is<USD500,000 [Figure 9].Similarly, the Futurewealthy in the Asia Pacific region are not far behind. Here, 64% are alreadyusing financial apps from their wealth managers. This is more than double the level of uptake formobile financial services in the Americas, and well ahead of Europe too [Figure 10].In fact, if a wealth manager has opened an app channel to reach out, it seems Futurewealthyclients are more than willing to use it.Figure 9: Use of mobile and tablet applications (by worth)Does your main financial provider have an app?
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 12Moreover, these take-up levels suggest that the world’s Futurewealthy are ready to rely on theirwealth management providers’ know-how. But, squeezing complex financial information into thebusy lives of these high-flying Futurewealthy will be no simple task.They want quality information and tools, as well as the flow and the flexibility to connect. As keenco-consumers, the ability to share and compare will also be important as they vector towardinvestment choices.All of this adds up to the kind of investment technology that can make Futurewealthy customerssmile.Wealth managers may not be there yet, but with more focus on what is “helpful” when it comes toinvestment technology, they have a real opportunity to get much closer to these potential futureclients.Figure 10: Use of mobile and tablet applications (by region)Does your main financial provider have an app?
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 13ONCE WE BELIEVE IN OURSELVES, WE CAN RISK CURIOSITY, WONDER,SPONTANEOUS DELIGHT, OR ANY EXPERIENCE THAT REVEALS THE HUMANSPIRITRather than ending this paper on a low note, we would like to end it on a high one. As we haveseen once again, the world’s rising wealthy are putting themselves at the forefront of thetechnology revolution. In our earlier papers, we found them spending many hours each weekusing new technologies to research, to network, connect, discuss and share. So, it comes as nosurprise in this paper to find the same enthusiasm spilling over into their financial relationships.As curious creatures, the Futurewealthy are undoubtedly challenging customers. Yet, the desirethey have for more intelligent and innovative technologies from their wealth managers is far moreof an opportunity than it is a threat. It begs the question from wealth managers: how can theirinvestment technology be moved from the purely mechanical, to the cognizant, empoweringindividuals to learn and understand more about their investment choices.This kind of knowledge sharing has always been at the core of the personal relationships wealthmanagers build with their clients. But, as we have seen throughout this series, technology doesnot change the personal; it enables it.It follows that in future helpful investment technology will not just need to deliver; it will also needto delight.
  • The Futurewealth ReportHelpful investment technologies©2013 Scorpio Partnership. All rights reserved | 14ABOUT THE PARTNERSScorpio PartnershipScorpio Partnership is a pioneer in the art of translating the complex needs of wealthy clientsinto practical, innovative and profitable solutions to target these customers. This award-winningfirm has developed client insight from thousands of millionaires and billionaires around the world.With this knowledge, the firm has implemented strategic research, practical consulting andbusiness innovation projects in over 35 countries.Standard Chartered Private BankStandard Chartered Private Bank is the private banking division of Standard Chartered Bank.Headquartered in Singapore, the Private Bank employs over 1,200 staff, including 450relationship managers, globally. It has 22 offices (with two trust offices) across Asia, Africa,Middle East and Europe.The Private Bank leverages the natural strengths of Standard Chartered: A heritage of over 150years in international banking, a global network across more than 70 countries, and strong localpresence in key growth markets. These put the Private Bank in an advantaged position to growsteadily and deepen client relationships across its core markets.SEISEI (NASDAQ:SEIC) is a leading global provider of investment processing, fund processing, andinvestment management business outsourcing solutions that help corporations, financialinstitutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As ofDecember 31, 2012, through its subsidiaries and partnerships in which the company has asignificant interest, SEI manages or administers $458 billion in mutual fund and pooled orseparately managed assets, including $201 billion in assets under management and $257 billionin client assets under administration. For more information, visit www.seic.com.Morar ConsultingMorar Consulting was founded to bring new approaches to brand strategy and brandmeasurement to help firms grow the value of their brands. Their work is built on a combination offour key elements: insight, expertise, technology and action.Important InformationAll graphical and image material in this report are sourced by and to Scorpio Partnership.Standard Chartered Private Bank is the private banking division of Standard Chartered Bank (“SCB”). Private banking activities may be carried outinternationally by different SCB legal entities and affiliates according to local regulatory requirements. Not all products and services are provided by allSCB branches, subsidiaries and affiliates. Some of the SCB entities and affiliates only act as representatives of the Standard Chartered Private Bank,and may not be able to offer products and services, or offer advice to clients. They serve as points of contact only.Standard Chartered Bank is incorporated in England and Wales with limited liability by Royal Charter 1853, Reference number ZC 18. The PrincipalOffice of the Company is situated in England at 1 Aldermanbury Square London EC2V 7SB. Standard Chartered Bank is authorised and regulated bythe Financial Services Authority under FSA register number 114276 VAT number: GB 244106593.SEI solutions may be offered internationally by different SEI Investment Company subsidiaries and affiliates according to local regulatory requirements.This material has not been approved by any of the SEI subsidiaries or affiliates as a financial promotion or marketing communication for anyprospective investor. The information contained in this document has not been independently verified by SEI or any legal entity of the SEI Group ofCompanies. This document is not intended in any circumstances as an offer or solicitation to subscribe for or acquire any securities or sale of anysecurities in any jurisdiction.