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Hyper-personalization is creating new opportunities in wealth management

Paul Hutchins, Log in to subscribe to the Blog

A sea-change is taking place in the wealth industry.

This change is not driven by a shift in monetary policy and low interest rates. Nor is it influenced by regulators and their endless pursuit to protect consumers and the industry. In fact, change has always been a constant in this industry. Most realize that the wealth management industry has been fundamentally transformed by the pandemic, new technologies, increased competition, and ever shifting investor expectations. This time, however, a perfect storm has been brewing. The convergence of technology, the changing economy, and a shift in demographic trends are transforming the industry and creating unprecedented opportunities for firms to capture an immense pile of global wealth.

But there’s a catch. The pandemic and an increased reliance on digital channels have reshaped the way consumers engage their investment advisors. Consumer expectations have shifted and, along with them, the investment advisory business. Consumers now have an increased appetite for a digitally enabled experience. The business model has changed, and advisors must now offer a wide range of digital solutions or risk losing new opportunities and even their existing market share to competitors who embrace the new paradigm.

Digital and omni-channel capabilities are not new. While the pandemic has created a sense of urgency among many firms to embrace digital transformation more quickly, the truth is that the real threat is coming from increased competition from those that have already migrated their legacy systems and applications to digital and from fintechs who have always had digital embedded in their DNA. Consumers are demanding more personalized service and for their advisors to be acutely aware of their changing financial goals.

The challenge to the status quo in wealth is that most firms are not adequately prepared to meet this change in consumer expectations.

Most firms are still lagging behind and have not embraced the adoption of new technology. Gen X, Millennials, and Gen Z will no doubt continue to expand their use of anytime-, anywhere-, any-device access. These customers are not inclined to spend time with a financial advisor at a physical location and have the added expectation that financial advice should be delivered at the time and place of their choosing.

Surveys and industry professionals also agree that as much as half of investors would switch providers if they don’t meet their rising expectations.

But this sea change is also creating a number of opportunities for wealth management organizations:

  • High-net-worth customers will transfer over $68 trillion to Millennials over the next 25 years. Millennials are more comfortable with digital technology and prefer handling transactions themselves with digital solutions.
  • The net worth of women is increasing with $72 trillion in global wealth.
  • Millennials will drop wealth managers that do not offer fast service and digital capabilities.
  • Technology will enable wealth firms to reach investors whose small savings would have previously made them unprofitable to service.

To transform these opportunities into results – improved response rates, increased incremental investor balances, and increased assets under management (AUM) – it’s critical you engage with prospective clients on an individual level:

  • Sending more targeted offers to increase response rates.
  • Catering messaging to clients’ investment attitudes (e.g., high-net-worth individuals who may focus on environmental, social, and governance – ESG – portfolios).
  • Delivering offers via multiple channels (email, mobile, online banking, frontline tools and telephony), with follow up from advisors.

If your firm is not already connecting with clients on a one-to-one level across channels or using a hyper-personalized approach during every interaction, you’ll need to implement capabilities that allow you to start engaging now.

Key technology for one-to-one, hyper-personalized engagement

Central to hyper-personalized interactions is the ability to unify data, analytics, and channels to create a seamless, connected experience. By implementing a centralized “brain,” you are better able to combine historical and real-time data to determine the context of each interaction and then apply predictive and adaptive analytics to deliver a contextual message that is 6x more likely to elicit a response. Pega’s Customer Decision Hub™, for example, is an “always-on” brain that makes it possible to engage with relevance and pivot between serving, selling, and retaining, whether your clients are checking their portfolio online or speaking to their financial advisor. Having the capability to deliver that next-best action across any channel makes it possible to personalize event-triggered marketing; inbound, outbound, and agent engagements; arbitration; and decisioning.

For wealth management firms, the three best use cases for an always-on, personalized approach are:

  • Upsell and cross-sell: Leverage real-time decisioning to identify in-market clients, then trigger a contextual offer automatically – without having to wait for a campaign
  • Proactive service: Identify clients who will need service and trigger outreach automatically – deflecting a service event before it happens.
  • Client retention, nurture and loyalty: Trigger value-add messages that build loyalty on a day-to-day basis – even when the client isn’t in-market for a product or doesn’t have any open service issues.

Markets, technologies, and customer habits are evolving. Your approach to customer engagement should, too.

As technology continues to evolve and investor habits change, the most successful wealth firms will be able to build and protect market share, increase assets under management, and improve income for their clients. By effectively marketing to your existing client base with real-time, contextual offers that are relevant and meaningful, you’ll create opportunities for real wealth growth.

Learn more:


Industry: Financial Services Product Area: Customer Decision Hub Product Area: Pega Customer Decision Hub Topic: AI and Decisioning

About the Author

In his role as Pega’s Senior Director and Industry Principal for Financial Services, Paul Hutchins advises some of the world’s most recognizable financial brands on opportunities for growth, engagement, and digital transformation.

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