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The Importance of Building Trust With Wealth Management Clients

In a CNBC interview, MIT professor and Nobel Laureate Robert Merton spoke about the importance of building trust in the wealth management client experience. “What you need to make technology work is to create trust. Technology doesn’t create trust on its own,” Merton said.

So, how can you create the trust necessary to ensure that your complex technology investments produce their intended returns?

In an age when affluent investors manage roughly half of all assets with no professional help, building trust in the advisor relationship is a challenge. When asked in a recent study by SpectremGroup to select their reasons for not using an advisor, 52% of millionaire respondents chose, “I can do a better job of investing than a professional,” while 48% said, “I don’t believe an advisor would look out for my best interests.” Not only must investors trust the technology, they must also trust the organization.

That trust must be earned every day, at every touchpoint, and during every transaction in the client experience.

Creating trust in the technology, while not simple, is relatively straightforward. Clients trust technology when the applications with which they interact are well designed, intuitive, and available on their phones, laptops, and tablets.

Moreover, the content and features that applications provide should satisfy clients’ investment objectives. As automated advice becomes more widespread, clients will trust technology when they are educated about its risks and limits, its dependencies on client-provided information, and its behavior during market stress events.

Clients must also trust that firms have the wherewithal to minimize (and resolve) errors resulting from automated advice technology as well as to safeguard sensitive data and personally identifiable information.

Not simple, but relatively straightforward.

What is less straightforward, and perhaps more complicated, is creating trust in the organization. That trust must be earned every day, through thousands of client interactions, with both humans and technology. Strategies that focus solely on exploiting the Millennial generation’s fondness for technology run the risk of not adequately addressing an overall client experience that makes clients feel like they have a relationship with an organization they can trust, no matter the advice delivery channel.

The risk, of course, is that as an industry late to the digital transformation game, wealth management firms are playing catch up and looking at technology as the silver bullet.

Investors are evolving, but plenty of research indicates that core investor values have not changed significantly. Despite an increase in do-it-yourself solutions, the use of personalized advice will likely remain dominant for the foreseeable future.

A tremendous need exists for foundational wealth services to demystify the savings and investment process. Traditional wealth management firms have undeserved younger investors, and these firms must find new ways to reach the younger mass affluent market.

Digital technologies are, and will continue to be, imperative to providing convenient and affordable access to advice and to meeting the evolving needs and wants of Millennial clients. This will drive increasing dependence on digital technology, and the advisor role will shift from one focused on stock picking to one more focused on risk tolerances, investment preferences, and other factors related to portfolio construction, optimization, and risk management.

We recently published a guide that explores how to build trust in wealth management. You can download it by clicking here or filling out the form below.

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Scott Albahary, Chief Strategist, Financial Services

Scott Albahary applies his wide range of knowledge and skills to advise Perficient’s financial services clients on business and technical strategies and on defining, developing, and implementing these specific strategies.

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