Financial Services

How to Optimize Digital Wealth Management

Investors helplessly watched significant swaths of their savings disappear as global markets plunged and their businesses made a fraction of previous earnings.

Everyone is wondering what the long-term impact of this economic freefall will be on their financial goals and how they can safeguard their portfolios in the meantime. It’s time for all businesses to reassess their roadmaps toward digital transformation. COVID-19 just accelerated benchmarks that may have been five to ten years away.

With an integrated digital platform that drives deep engagement, these early adopters could proactively address COVID-19’s challenges to the financial wellbeing of their clients.

What can wealth management firms learn from rivals that have already taken steps toward their future states as digital leaders? They can get up to speed by studying the innovations their competitors have already adopted and consider investing in similar offerings:

Managing black swan events is part of their job, so wealth managers should know how to handle them.

Amid this pandemic, it’s clear that the needs and risk profiles of clients have changed, which necessitates a reallocation of assets in their portfolios. Many people are struggling with the immediate threat to their current stream of revenue and need to unlock immediate cash to pay their bills and fulfill their responsibilities in work and personal life: business expenditures, mortgages, school tuitions, philanthropic donations, etc.

Once that’s addressed, wealth managers need to revisit the mid to long-term goals of their clients. This includes potential changes to their lifestyle and retirement age. But shifting their investments early and thoughtfully could shorten this time of purse-string tightening and prevent the worst potential consequences of the economic fallout.

It’s important for wealth managers to understand that this too will pass and macrotrends will change. Countries and businesses that handle the crisis better will come out stronger than others. The balance of economic power will likely shift.

Travel and hospitality have already suffered significant losses and these are all but guaranteed to continue until a semblance of our previous reality is restored. For a variety of reasons, other sectors will boom and become even more vital to our lives.

Healthcare, for instance, is an essential part of our entire system and has been woefully underfunded up until this point.

Other sectors, such as online retail, were previously seen as nonessential luxuries for people who didn’t have time to go shopping or were perhaps too lazy to leave their homes. Now it’s clear that online retail wasn’t just a convenience but a crucial part of our new world.

Digital-first financial firms are better suited to handle the current predicament given that their entire business model is predicated upon frictionless service from anywhere at any time. That’s exactly what customers need at a time like this. But it’s also what they want during simpler times anyway.

In this new world, wealth managers need to take decisive actions:

• Leverage AI and increased data structures to create more personalized experiences for clients and advisors
• Rework traditional asset allocation models to improve portfolio performance and reduce risk for the clients
• Focus on cloud native solutions to drive business agility and operational effectiveness
• Embrace new alternative investments (fintechs, digital currencies) to diversify and improve results
• Strengthen accounting, results and reporting platforms to make timely, accurate information available to clients
• Use newer collaboration platforms (video conferencing, chatbots) for seamless, real-time client support