Digital Wealth Management Here To Stay


    Digital wealth management firms have introduced disruptive industry changes that are here to stay and traditional players need to act quickly to determine how to stay competitive, says EY. While some have discounted the robo-advisor movement as no match to human investment advice, EY’s report, ‘Advice goes virtual: how new digital investment services are changing the wealth management landscape,’ suggests otherwise. It says digital entrants’ efforts to streamline the online client experience, provide greater transparency and lower prices for lower-end markets have gained traction and can’t be ignored by Canada’s wealth-management industry anymore. “We have yet to see how the digital models will hold up in a market downturn and whether they will reach profitability quickly enough, but the improved client experience and high level of transparency can’t be underestimated,” says Gregory Smith, wealth management advisory leader at EY. “They’re also tapping into markets that are largely ignored by traditional wealth managers.” Traditional firms have largely focused on high-net worth clients, but these emerging digital firms are targeting a wider range of clients, across all demographics. While the tech-savvy millennial generation is the natural target for automated investment advice, baby boomers are another promising market. As they retire and switch from investing money to withdrawing money, they too will be eager to use their mobile devices and tablets to check their portfolio balance, withdrawals, and fees at the touch of a button. EY says in addition, the greatest wealth transfer in history is currently underway as baby boomers pass along wealth to their heirs. This is creating more pressure on the traditional model, because the next generation of clients demands transparency, accessibility, and seamless customer experience across all digital devices. As of 2011, there are over nine million baby boomers in Canada, making them the largest generational client base. They are closely followed by their children – the computer-savvy Generation Y, or Millennials.