London has always attracted wealth. It is home to nearly 100 billionaires and 5,000 classed as super-rich – those with £20 million or more in disposable assets. In addition, as an international centre for finance, technology and media, London attracts many upwardly mobile individuals known, in financial jargon, as ‘high earners not rich yet’ – or HENRYs for short.
Unsurprisingly for these reasons, London is a major centre for wealth management and financial advice. This sector remains in many ways a very traditional one – paper-based reports and face-to-face meetings in plush offices or at clients’ kitchen tables.
But this sector is now adopting the latest tools to better serve both high-net-worth individuals (HNWIs) and the mass affluent by re-tooling digital advice for these demographics. Once perceived as the domain of mass market robo-advisers, modern wealth managers are now using digital financial apps to engage HENRYs and even more experienced HNWIs on a journey to maximise their wealth.
Growth through digital
Traditional robo-advice itself isn’t the experience this demographic is typically looking for. It is based on answering simple questions to find the best investment strategies to meet objectives and match the appropriate risk appetite. Digital advice robo certainly has a place – suited to serving broad demographics that don’t require the level of sophistication required of wealth managers. Instead wealth managers are increasingly focused on designing experiences that speak to the individual themselves – i.e. that promote digital empathy.
This first step to achieving this is to develop a series of personas to provide the functionality and experience that appeals to individuals sharing a set of common characteristics or goals. This should then be used to shape the experience, advice and level of services they receive from the wealth manager. Done right, it means everything is tailored according to how the client wants to interact with their wealth.
For example, a self-selector persona is hands-on: they are usually a HNWI, know the markets and want to be involved or even self-sufficient. Therefore, wealth managers are providing education and curated content that speaks to this persona, alongside tools to browse and research investment solutions and self-select investing options. Communication respects their mindset by offering a variety of channels: chat, video chat, secure messaging, voice memos. Everything is on their terms.
HENRYs are more likely to fall under the goals-based planner persona. This segment doesn’t want complex functionality – they need a service that considers all aspects of their financial wellbeing. Good digital wealth management will help them clarify investment goals, answering what they are trying to achieve and why. For this, wealth managers will ask them to provide a whole host of information – how will they fund these goals, what is their appetite for risk, etc. Digital advice should also provide a constant communication tool to help them stay on track.
A game of wealth
London’s wealth managers are also looking beyond digital tools to better serve the city’s affluent.
To ensure digital experiences truly resonate with investors, wealth managers are increasingly adopting gamification, behavioural science and decision theory into their user experiences. This may sound lofty and ambitious in the world of financial advice, but these are essential techniques to promote better engagement and encourage positive behaviours to help build investors’ wealth.
For HENRYs, for example, wealth firms can look to implement the Smart Dynamic – gamifying the way educational materials are presented in order to motivate investors to consume important information more rapidly. By helping investors develop greater financial literacy, they become more confident in investing decisions, which further empowers them. The aim here is to make finance easier and more accessible, especially for those young high earners growing their wealth, but equally to do it in a way that doesn’t feel onerous. Better education allows the wealth manager to better advise investors, especially through turbulent financial markets.
Pathway to success
In testing times, digital advice is critical in helping to protect and grow an individual’s wealth. With the right technology partner and thinking, wealth managers can offer an always-on service to clients to better help them achieve their financial goals.
Wealth managers who are already harnessing digital advice are the ones best positioned to serve London’s HENRY demographics to encourage financial growth and wellness, while also protecting the wealth of the city’s super-rich. This is “new think” – 21st century wealth management that is intuitive, involving and individual.