Insurance Archives - SigFig

What’s Your Next Move? 3 Areas of Investment to Impact Clients Now

Lauren Jarvis — Tue, 05 Sep 2023 17:09:03 +0000

[On Demand] What's Your Next Move? 3 Areas of Investment to Impact Clients Now

Top digital strategies for driving greater personalization and efficiencies

Steve Mattus

CIO & GM of Wealth

Steve leads SigFig’s investment strategy, style and policies, including strategic investments in AI intended to support the effectiveness and efficiency of advisors

Claire Willits Root

Director, Digital Wealth Product

Claire is instrumentally leading our digital wealth product solutions. Before SigFig, Claire spent many years at Gartner.

Tuhin Sen

Senior Product Manager, Engage

Tuhin leads Sigfig’s product, Engage. Before Sigfig, Tuhin has worked with organizations such as Uber, Lambdatest
and Deloitte.

We dedicated this event to address the pressing digital priorities of senior leaders in the banking, wealth management, and insurance industries.

In an era of rapid technological evolution, staying ahead of the curve is vital. This virtual event brought together industry experts, thought leaders, and innovators to explore the strategies and solutions that define where to place your bets in both digital wealth and AI-driven sales effective tools.

Why Listen?

In recent research, How can banks and lenders thrive in the era of uncertainty?, published by Moneylive, Smart Communications, and Salesforce, they identified 3 key priority areas in which senior executives at banks and other lenders were prioritizing digital investment:

Achieving Agility, Flexibility, and Scalability:

In today’s dynamic market, agility, flexibility, and scalability are non-negotiable. Discover how SigFig can help you meet these challenges now.

Optimization of Staff Effectiveness:

Reduce operational pressure and elevate staff effectiveness through digital automation. Learn how digital tools can redefine roles, making your team more efficient and customer-centric.

Enabling Cutting-Edge Self-Service and Personalization

Explore the realm of AI analytics, generative AI, and cloud-based solutions to empower unparalleled self-service experiences. Elevate customer conversations management through advanced personalization, meeting the demands of today’s tech-savvy clientele.

Learn more from Sigfig CEO, Mike Sha, on WealthTech Today

Engaging Advisors Through AI-Powered Collaboration

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Operational Efficiency for The Back Office: The Time is Now

Kerry O'Keefe — Fri, 18 Aug 2023 17:09:02 +0000

When was the last time you heard of clients choosing an advisory firm because they have a “great back office?” While the answer to that may be “never,” many of the relationship-building activities that clients value most are made possible by back office efficiency. In fact, a strong operating system can generate one of your firm’s most precious assets — advisor time.

According to the recent J.D. Power 2023 U.S. Financial Advisor Satisfaction Study, nearly one-third (28%) of financial advisors say they do not have enough time to spend with clients. These findings come at a crucial time for the industry as it also faces a growing attrition problem. According to Cerulli research, approximately 36% of total industry headcount plans to retire in the next ten years. Couple that with the alarmingly high 75% failure rate among rookie advisors, and the urgency to create high quality client time becomes even more apparent.

As institutions continue to manage through long-term digital transformation and data integration projects, here are three high-impact automation improvements that can help keep advisors engaged in what matters most — their clients.

Client account onboarding
For advisors, opening a new account should be a triumphant moment. Unfortunately, opening and onboarding new clients can be a tedious and difficult experience, and not the way either party wants to kick off the relationship. Advisors are often dealing with meeting prep, multiple systems that don’t talk to each other, and redundant data entry. The amount of time lost working across different systems can be staggering, which makes the onboarding process a great candidate for automation. Our technology and services are used by thousands of financial advisors and investors. We estimate the traditional onboarding process to take between 35 to 70 minutes per client and our technology is designed to significantly reduce onboarding time.
Even if your company has a complex set of legacy systems, there are a range of cloud-based tools that can streamline the experience, from proposal development to investment selection, with data flowing through a single platform. With these changes in place, the onboarding process can be significantly reduced to as little as 10-15 minutes per client, under most circumstances. If you consider an incremental time savings of 45 minutes for a given advisor opening 100 new accounts, that could amount to up to 75 hours or 9 full days of time that can be reallocated to developing relationships.
Compliance, oversight and account review
Anyone who has ever worked as a financial advisor understands the importance, but also the complexity, of compliance and account review. Even the smallest error or inconsistency can land an account in NIGO (Not In Good Order) limbo. Not only can this delay the transfer of assets, but advisors may be forced to navigate multiple systems which could require unnecessary back-and-forth with back office teams and a poor user experience, causing advisors to spend between 15 and 30 minutes per account review.
To alleviate these challenges, digital solutions can bring greater consistency and accuracy to the account opening and review process. Before an account can even be submitted, inconsistencies can be flagged and corrected with a client in the moment, significantly reducing the call backs and reworkings.
In addition, certain technologies can help advisors and investors identify the most suitable investment portfolio when opening an account. Through a host of questions about investor goals and risk tolerance, the advisor can suggest the right investment options to ensure the long term allocations are appropriate. Compliance logic should be built in and integrated across systems to mitigate risk, improve the client experience, and increase advisor success.
The right digital system can reduce time spent on compliance, oversight and account review needs to as little as 0-5 minutes per account. Assuming a 15 minute savings per account, an advisor opening 100 accounts could save up to 25 hours, or 2 full days a year.
Client servicing
Advisors should be focused on client service, but can not engage with their clients as much as they’d like if that precious time is taken up by mundane and administrative tasks. Advisors often get pulled away from problem solving and advice giving to support tax statement requests, account updates and money transfers. And of course there is the time spent chasing down clients for their mandatory annual reviews. Based on our observations and data we’ve reviewed, we estimate a typical advisor spends 25-60 minutes each year on this kind of client administrative support.
Through technology and automation, a single platform can support clients and their advisors in completing these tasks far more efficiently. Tech-enabled functions not only provide easier access, but they allow for video collaboration with these tasks already integrated. This kind of efficient collaboration can save an advisor up to 30 minutes per account. For an established advisor with 300 accounts, that could amount to a time savings of up to 150 hours or 19 days per year.

So what’s the right digital platform? Look no further — SigFig offers a seamless and modern digital wealth experience with cost-saving technology that will help you streamline your back office process, help determine investment suitability for clients, and help you satisfy certain compliance and review tasks more efficiently. Then you can focus on high-value client interactions and scaling your business, which is where your efforts should be directed.

See disclosures at https://sigfig.com/. All content presented herein and discussed in any referenced or linked materials is provided for informational purposes only and is not intended to provide any tax or legal advice or the basis for any financial decisions. Information presented is believed to be from reliable sources, but we make no representations as to its accuracy or completeness. Opinions expressed are those of the individuals presenting them and are subject to change, and not necessarily those of Nvest, Inc. or SigFig Wealth Management, LLC. Hyperlinks are provided as a convenience. We disclaim any responsibility for information, services or products found on linked websites.

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Reducing Friction in Financial Management: Empowering Advisors and Clients for Success

Kerry O'Keefe — Fri, 18 Aug 2023 16:46:41 +0000

The financial services industry, like many others, continues to seek ways to reduce friction in the customer journey. Achieving financial wellness requires a proactive and informed approach by advisors and their clients. But along the road to building a productive investment management relationship are many areas of potential friction: from the emotional nature of financial decision making for clients, to inefficient systems and processes on the advisor’s side.

The source of friction in financial management

To reduce friction related to taking financial action, wealth management firms need to first factor in what causes friction in the investor journey and realistically, what can be done to reduce it.

Let’s start with investors. As a financial advisor, it’s more than knowing your clients’ kids’ names. The 2022 book, The Psychology of Money, does a great job of framing the complexity of the investor challenge, with financial success being more about how we act than what we know. The book emphasizes that financial decisions don’t happen on spreadsheets, but in dinners with family or, of course, in meetings with a trusted financial advisor.

In decision making moments, investors may be processing investments on an emotional level. This can be rooted in their financial experiences while growing up, past investment decisions, near-term financial objectives, and current market conditions. Connecting clients to investments that make sense based on their unique profile, objectives and risk tolerance, will require more than a spreadsheet. Investors and FAs ideally need a strong relationship based on trust and empathy. And even more fundamentally, the time needed to build one.

With that said, let’s look at the reality for advisors. The need to spend more time with current and potential clients is not a new challenge. What is new, however, is the growing demand for financial advisors to address investor concerns over some pretty substantial unknowns, including market volatility and swings, as well as the emerging Great Wealth Transfer.

In addition, advisors are facing an increasingly fragmented set of software systems needed to manage the needs of clients while staying compliant and responsive. With this kind of pressure, it is no wonder advisors are both retiring and failing at record rates.

Clearing the way to deliver great advice.

In our last blog, Operational Efficiency for the Back Office: The Time Is Now, we discussed ways wealth management teams can potentially find hundreds of hours each year, just by driving operational efficiency in areas like client onboarding, account oversight, and certain compliance-related tasks. With those hours reallocated to client engagement, advisors can spend more time tapping into the emotional concerns related to making investment decisions. But what do those conversations look like? And what tools are available to advisors to further reduce the friction to aid clients in taking financial action?

Having a strong foundation for offering investment options to clients is the key to further strengthening relationships, and ultimately increasing profit margins.

Here are three client-facing ways we believe can improve the customer journey and reduce the friction in taking financial action:

Offering the right products based on wealth complexity. Once a new account is open, it may feel like the hard work is over. But choosing the right allocation of assets for a new client is where the relationship building and trust begins. A modern managed account platform should offer targeted models that can also be blended to quickly meet a client’s needs. SigFig’s Digital Advice Pro has made this possible in approximately 10 minutes, versus the roughly 35 minutes that it might take in a more traditional process or platform.
Reinforcing confidence in the model options available. Giving financial advice is a huge responsibility, especially in markets with known uncertainty and inherent risk. Advisors may be better positioned to perform better for their clients when they have confidence in the models they are recommending. SigFig’s Digital Wealth Platform offers a second layer of model due diligence. By reviewing and researching all of the models and portfolios being offered, our platform is designed to save significant time for financial institutions and help increase the speed and confidence of advisors as they make their recommendations.
Knowing that reassurance that is just a click away. More often than not, a client’s need for financial advice will happen outside of an annual review. One of the best ways to reduce friction in financial action is to make connecting with a financial advisor spontaneous and easy. With SigFig, your advisors can be a click away with remote engagement tools to enable clients to fund their investments and make decisions in the natural course of life. Advisors can hop on a virtual interaction through SigFig Engage, loaded with embedded tools like Docusign to reduce client hesitation or uncertainty by demonstrating tradeoffs in the moment.

Technology cannot change the fact that most financial decisions have an emotional component. But the right technology can enable advisors and their clients to get to the heart of their financial choices, and make them with greater confidence and less friction. Getting this right can unlock real potential for financial institutions to retain both advisors and clients and increase the potential for improved financial performance.

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Wealth Management’s Road to Financial Wellness – Web Seminar Takeaways

Lauren Jarvis — Fri, 23 Jun 2023 14:42:09 +0000

Last week we had the privilege of gathering with leaders from some of the industry’s largest wealth management firms for our web seminar, Modernizing Digital Wealth to Deliver Financial Wellness: SigFig’s Vision and Roadmap. In our time together, we not only had a chance to share SigFig’s unique view on modernizing digital wealth, but gained a collective view of the group’s priorities through a series of live polls conducted throughout the session.

Here are some highlights of what we shared about the migration towards a financial wellness model:

1. Increased consumer demand for financial wellness.

Wealth management is playing a more prominent role for a growing number of consumers. No longer just investment strategies for high net worth clients, the mass affluent are looking for a form of investment guidance that enables them to achieve financial wellness across their entire journey.

2.Financial wellness is a process, not an event.

Winning the emerging mass market will require a focus on goals, life events, getting to know consumers and what would make for good and well-timed financial advice. This may not be aligned with the more siloed product focus (i.e., banking, mortgage, insurance, etc) in many financial institutions.

3. Financial institutions are seeking new delivery models.

To compete for the growing demand for this new kind of financial advice, financial institutions—banks and credit unions, wealth management firms, and insurance companies—are looking for ways to modernize their approach. They are considering how they collaborate internally, to how and when they interact with customers – ultimately to reduce the friction for clients to take action.

4. Technology is accelerating model overhaul.

Technology is making it possible to move away from a rigid model of people pushing products in branches to a fluid model that identifies and responds to natural behavioral triggers. Putting information at the fingertips of customers and wealth managers enables personalized advice and experiences – when, where and how they want it – incorporating human interactions when it matters most.

5. A financial wellness model has 4 key pillars.

As companies look to modernize and migrate to more of a financial wellness model, they need to plan around four key pillars: integrated financial services with personalization, advice that drives outcomes, screen-based collaboration that leverages human relationships, and modernizing planning. These pillars working together make it possible to organically welcome new and a more diverse set of investors into your practice over time.

Not surprisingly, the polls throughout our session showed strong interest in headline grabbers, like AI.

But the session also confirmed our suspicion that basic “blocking and tackling” are still top of mind among executives as they pursue becoming the financial management partner of choice for an increasingly diverse population.

Future roadmap planning showed a demanding “all of the above” strategy. 50% of participants said they were focused on all four strategic priorities listed – offering a goals-based planning experience for your customers, optimizing account opening, enabling advisors and clients to collaborate virtually, and serving the mass affluent investor efficiently. The remaining were singularly focused on goals-based planning (38%) and optimizing account opening (13%).
Personalization and effective advice rise to the top. Of the 4 pillars of financial wellness discussed in the session, the two most important to participants were integrated financial services with personalization (40%) and advice that drives outcomes (30%), followed by screen-based collaboration leveraging human relationships (20%) and modernizing planning (10%).

Do you have wealth management priorities that didn’t not come out in these conversations? We welcome the opportunity to connect and hear your perspectives on the current and future wealthtech landscape.

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[On Demand Web Seminar] It’s Not Monopoly Money: The Adoption of AI for Wealth Management

Lauren Jarvis — Wed, 07 Jun 2023 20:52:00 +0000

[Web Seminar] It's Not Monopoly Money: The Adoption of AI for Wealth Management

View the recording of our thought-provoking virtual event on the adoption of AI for wealth management.

Mike Sha

CEO, Co-Founder

Mike has held senior roles at Amazon, and has led SigFig to a focus on the advisor and client relationship

Dan Mercurio

Chief Revenue Officer

Dan has spent nearly two decades in leadership roles in the retail banking industry, focusing on digital transformation

Explore the transformative power of AI in wealth management and its real-world implications.

Gain insights from industry experts and discover how AI can revolutionize your financial institution. We spend time on the questions we are not asking but should be, as well as the critical junction of preserving human and tech harmony.

We Explore

What’s keeping you up at night? What questions would you ask a crystal ball? We explore these areas and more:

The potential impact of AI in wealth management

Transforming human expertise and contextual understanding
Mitigating unforeseen risks and bias that could form from AI
The power of building trust and establishing long-term relationships with clients
Preparing for the next wave of innovation

Thoughts from Fintech Meetup 2023 in Las Vegas

Kerry O'Keefe — Mon, 22 May 2023 17:30:42 +0000

Listen to Chief Product Officer, Amanda LaFerriere, and Chief Revenue Officer, Dan Mercurio, share their insights on Fintech Meetup themes, or read the summary below.

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If you attended Fintech Meetup, you likely speed dated for networking, maybe pet an emotional support animal or two, cruised through the elaborate exhibit halls, or attended sessions hosted by thought leaders.
Our team spent time doing all of these things, then found ourselves gravitating towards a few themes and threads we consistently encountered. Below you will find adapted content from Amanda and Dan’s musings after the event.

Eliminate redundancies through partnership.

While we attended, we were in the middle of a possible banking crisis. Silicon Valley Bank had just collapsed, putting a spotlight on banks and efficient operations. Much of the conference focused on this idea of eliminating redundancies through a myriad of ways, largely through some form of partnership. As Dan shares, “Over the past five years or so, the talk track around partnerships has absolutely changed. At one point in time it was, “Do you partner?” and I think now for firms large and small, it’s no longer a conversation of “do you partner,” it’s “where do you partner?”

You’re going to partner, so what should you look for in a Fintech partnership?

During one panel featuring leaders from The Financial Brand, Citi, Wells Fargo, and Huntington National Bank, they talked about the “4 s’s” to consider when picking a fintech.
Speed: Are there partnerships that can be executed that allow you as a firm to get to market more quickly than if you were to build it yourself?
Scalability: Does this partnership allow you to scale a business or scale a segment strategy in a way that might not have been possible?
Service: Is the fintech with you for the long-haul? Do they have your backs after you sign on the dotted line?
Security: Security is table stakes, so the fintech partner you choose needs to be able to drive forward meaningful advancements, following compliance and regulatory execution from a risk management standpoint.

Amanda summarized that, “A fintech partner should talk to you about their 3 to 5 core capabilities. And then you reflect on this and say, are these also our core capabilities? If those capabilities are outside your wheelhouse, ask, “Does this firm get my customer segments, do they understand my mission and culture, and can they immediately add value – If yes, then this is who you partner with.”

Founders and startups continue to drive innovation.

It was invigorating to see and learn from a number of founders that have a lot of passion around what they’re building and what they’re starting. We saw firms focused on innovating wealthtech, payments, and a lot around digital identity.
Amanda shared her insights related to the startups and SigFig’s product strategy. “We strongly believe the new path forward for digital advice will combine human advisors with robo-technology to create more streamlined digital experiences for clients across multiple segments. While there is still a space for digital-only solutions, we see an emerging middle space in serving mass affluent customers that prefer a technology-led approach but still want the touch of a human advisor. You know, we are helping our financial institution partners leverage our robo-technology platform to build advisor efficiency and effectiveness to reach this fast growing segment through a hybrid approach, blending technology with human advice.
We see tremendous growth potential for this model going forward, particularly with the next generation of affluent investors. It’s no longer just about relationships on a golf course.”

So what does the future of financial advice look like?

In the near-term, the future is going to be utilizing technology to improve the segmented service model for both advisors and clients. We’re talking to a lot of leaders about questions like, “How do we position advisors differently? How do we give the home office a little bit more P&L control? How do we still have a great advisory experience, but offer a digital-only backup if the client isn’t ready for a conversation?,” Dan mused.
Amanda chimed in, “I agree—We want to help our partners find value in serving that middle segment of mass affluent investors and so we suggest focusing on efficiency. The opportunity to combine behavioral data with account data to drive an action that has positive outcomes for clients is still largely untouched. Because wealth management requires having a clear understanding of a client’s goals and risk tolerance, it allows us to build solutions that answer questions like,”How do we help large firms with hundreds, maybe thousands of advisors, really nurture folks at the right time?”
You know that client of yours has a son who’s going to kindergarten—how do firms like ours facilitate a nudge campaign that reaches out and asks if they’ve got any child care savings?”
Last, but not least, generative AI and LLMs will play a big role in the future of wealthtech. Finding ways to enhance customer service, improving advisor efficiency or identifying new asset opportunities in real-time, the areas for these tools to add value are vast. We continue to plan and invest in this topic and how it can help our partners achieve their strategic objectives and provide a better client experience.
If we missed seeing you at Fintech Meetup, we welcome the opportunity to connect and hear your perspectives on the current and future wealthtech landscape.

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[On Demand Web Seminar] Modernizing Digital Wealth to Deliver Financial Wellness

Kerry O'Keefe — Mon, 15 May 2023 20:03:45 +0000

[Web Seminar] Modernizing Digital Wealth to Deliver Financial Wellness: SigFig’s Vision and Roadmap

Hear insights from our May Partner Advisory Council meeting informing how SigFig helps power their strategic digital wealth goals.

Mike Sha

CEO, Co-Founder

Mike has held senior roles at Amazon, and was one of the original inventors of Amazon’s Prime program

Amanda LaFerriere

Chief Product Officer

Amanda specializes in the intersection between financial products, design & CX

Dan Mercurio

Chief Revenue Officer

Dan has spent nearly two decades in leadership roles in the retail banking industry

Roger Fong

Chief Technology Officer

Roger has spent over a decade leading the engineering function at SigFig

We want to help you provide advisor efficiency, market reach, and customer value

Financial services—and indeed, the world at large—have undergone a dramatic shift this year. And financial institutions require a modern platform to grow clients and assets more effectively and efficiently for mass affluent investors.

About the Web Seminar

Learn from Sigfig CEO Mike Sha, Chief Product Officer Amanda LaFerriere, Chief Revenue Officer Dan Mercurio and Chief Technology Officer Roger Fong as they discuss how SigFig’s platform approach provides:
A segmented service model by customer value
Omni-channel advice that drives outcomes
Digital onboarding, account opening & funding
Leading with wellness for every customer

Key Takeaways

The web seminar covered trends and insights learned at our 2023 May Partner Advisory Council meeting including:
Redefining product offerings by level of service, price, and the tools a firm utilizes to drive both analog and digital lead generation
What digital wealth technology trends/patterns we’ve seen recently, including the shift in distribution channels
How firms are defining success for both clients and financial service providers
Unlocking challenges advisors face and how this impacts SigFig’s work and product outlook

Read more from Sigfig CEO, Mike Sha, on industry trends to watch in 2023

Learn how FIs can offer more than investment advice by putting consumer needs at the center and taking screen-based interactions to the next level.

Learn More

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SigFig: Redesigned, Rebranded, Revisited

Lauren Jarvis — Mon, 15 May 2023 13:52:32 +0000

So, welcome. To our vibrant, functional new website.

Over the past 17 years, SigFig has evolved from a direct-to-consumer robo-advisor into a multi-faceted ecosystem of digital wealth solutions. We’re now an integrated software company providing wealth management teams with solutions to improve the client experience and empower financial advisors.
Our principal focus is on maximizing home office and provider efficiency and reach so they can spend more time on what matters. We power solutions for leading financial institutions such as Wells Fargo, Citizens, Santander, and Scotiabank.
As we have reimagined our own internal operations to continue driving innovation for firms and investors, we have simultaneously shifted the ways in which we help our partners meet evolving client needs, ultimately focusing on driving down the cost to serve across customer segments while adding back time for firms to deepen client relationships.
Our website is a combination of where we’ve come from, where we’re going, who we’re going with and how we navigate the future together.
In this constantly evolving landscape, we are inspired by the fact that change is the only constant.
The pace at which we consume information has increased. The options available to us are innumerable. And both fintech and wealth management continue to drive transformative changes across the financial services industry.
To thrive in this environment, we need to be adaptable and resilient. There are endless inputs—recognizing how to organize insights from distractions is essential to harness more disruptive ideas. By thinking beyond ourselves and focusing on the bigger picture, we become a driver of change, and enable financial institutions to drive innovative solutions for their advisors and clients.
At SigFig, we also have the benefit of being uniquely positioned to learn from our partners and understand what it takes to help them achieve their strategic objectives.
We know the best ideas come from working together and listening to diverse perspectives.
We are dedicated to providing a seamless, efficient, and personalized experience in everything we do—websites included. Our goal is that this new public identity facilitates meaningful connections with leaders across wealth management and enables new ideas for our industry.
We encourage ideas, feedback and coffee dates. We hope to meet you soon.
The SigFig Marketing Team

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Wealth Technology for Insurers: Empower Seamless and Efficient Investment Advisory

Kerry O'Keefe — Wed, 10 May 2023 18:05:09 +0000

Insights From the Seminar:
According to a recent Gartner survey, improving the customer experience and operational excellence – not revenue growth – tops the list of insurance digitization initiatives in 2023.
As the industry shifts to a focus on creating value and differentiated experiences, supporting a client’s needs outside of risk protection becomes increasingly important. Further integrating investment advisory into your organization’s offering becomes table stakes.
Why SigFig?
As we partner with insurance firms, we’ve found that building confidence and consistency in the provider, building a streamlined system and process, and enhancing controls and compliance are at the core of meeting client needs.
When you pair that with our virtual advice omnichannel solution, you deliver a seamless client experience, every time.

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Overcoming the Digital Divide: Connecting Advisors and Consumers Using Technology

Lauren Jarvis — Tue, 09 May 2023 15:26:31 +0000

Overcoming the Digital Divide:

Connecting Advisors and Consumers Using Technology as a Partner

Download now

Executive Summary

In 2022, there’s no shortage of financial solutions. The same can be said of financial services providers. However, despite the robust, practically overwhelming availability of services, financial management as a whole remains fragmented and siloed by legacy architecture.
In short, it’s still difficult for many individuals — even wealthy ones with greater access — to effectively and efficiently oversee their finances. Technology paves the way for longevity in the client relationship and long-term viability for today’s growing field of financial institutions.

Key Takeaways

Even in 2022, the financial services industry still faces steep internally driven technology hurdles, such as business silos, legacy architecture, and integration challenges.
Nearly 40% of financial advisors expect to retire in the next decade. Meanwhile, the number of mass affluent and millionaire households isn’t getting any smaller. Firms with a younger cohort of advisors are well positioned to prosper if they can cater to the hybrid needs of the affluent.
50% of high-net-worth and affluent clients think their primary wealth manager should improve their digital capabilities — from personalized offerings and omnichannel access to account consolidation and integrated services.
More and more financial advisors are choosing RIAs. Independence, monetary incentive, and lower technological barriers are the driving forces behind the migration.

The Financial Services Industry is Making Strides, but Investors Want More

If you work in wealth management, you’re well aware of that age-old disclaimer — past results do not guarantee future performance. Yet it’s not exactly stepping out on a limb to argue that the industry‘s future hinges on a critical investment: consolidation and technological expansion.
The consolidation of financial services, such as cash management and financial planning, can provide individuals with more convenience and transparency. Simply put, managing one’s finances is easier when it’s all laid out clearly in one place. And from the perspective of both the financial services provider and the client, the expansion of technological capabilities can unlock more control and data-driven insights, as well as improve the ability to make informed decisions.
The two parties best positioned to connect the dots and deliver a holistic solution are the ones already entrenched in the financial lives of many individuals: retail banks and wealth managers. The former typically welcome individuals into the world of personal finance as people set up bank accounts and budgets for daily transactions. Wealth managers, meanwhile, broaden the scope and assess the long-term big picture of an individual’s financial wants, needs, and goals.
However, both sides face their share of technological hurdles. Retail banking institutions must overcome antiquated legacy architecture that lacks front- and back-end integration, which can make product development a nightmare. As recently as five years ago, 43% of active banking systems ran on COBOL, a programming language that originated in 1959. While that figure has probably improved since then, modernization of a core banking infrastructure is a lengthy, onerous undertaking.
Wealth management firms are likely less restricted than retail banks, but they aren’t necessarily much nimbler — the financial services industry as a whole tends to be a laggard when it comes to tech adoption. So it’s no surprise that firms are still working out the kinks, even in 2022. Although adoption has become commonplace (the average firm uses five different software vendors), integration is another story. One survey found that the lack of integration between core applications is the biggest pain point for 57% of advisors.
Technology isn’t going anywhere. Quite the opposite — it has been and will remain the catalyst behind the future of financial services because clients expect user-friendly platforms with robust functionality. With that in mind, institutions have a choice: invest strategically in digital capabilities or succumb to disruption and potentially lose market share.

People Are Evolving. The Wealth Management Industry Must Too

If the last few years have taught us anything, it’s that managing money is a fluid process. Everything from behaviors and interactions to fears and goals can change as people — and economic conditions — evolve. Let’s explore the trends that firms should pay attention to as they map out their digital blueprints.

Investing is ‘in’

The year 2020 will live in infamy for a host of reasons, but there was at least one positive outcome: the universal prioritization of personal finance, most notably investing. McKinsey cites data showing that as of early 2022, the total number of direct brokerage accounts has ballooned by 40%, or 25 million new accounts, since the beginning of 2020 — and first-time investors have accounted for a significant percentage of these.
The catalysts for this in lux are, for the most part, transitory. It’s reasonable to predict that the big stimulus checks we saw during the pandemic, and the stay-at-home mandates that led to an abundance of free time in that period, are unlikely to recur anytime soon. So in all likelihood, the recent uptick in brokerage accounts should slow. Nevertheless, a horde of new investors — dubbed Generation Investor, or Gen I — is now in the market.

The ascent of the affluent

While this flood of first-time investors snagged headlines in 2020 and 2021, don’t forget about the ascent of the affluent. According to Equifax data, from 2014 to 2020, the number of mass affluent households (those with investable assets of between $100,000 and $1 million, although this definition varies) increased from 28.6 million to 38 million. In the same period, this segment’s share of total household assets grew by 38.5% to $13.3 trillion.
Wealth accumulation didn’t stop there. According to the National Bureau of Economic Research, the number of households with a net worth of at least $1 million rose by 30% from 2013 to 2019. Embedded in that rise is an even more dramatic shift — the number of households with at least $10 million ballooned by 70% in that stretch.
More importantly, the preferences of these high net worth households are changing.
And that figure represents a jump from 24% in 2018. That same three-year period also saw a rise in the percentage of affluent investors who worked exclusively with an advisor to manage their wealth, but by a much smaller percentage (29% to 33%).

Age is just a number

In terms of jockeying for position and seizing market share, it’s easy for financial institutions to set their sights on the generations of the future, such as millennials and Gen Z. These cohorts will eventually progress to a point of predominant financial influence, especially after the “Great Wealth Transfer,” in which Broadridge expects elder generations to bequeath $30 trillion to millennials. But that day may be further away than you think.
The U.S. Census Bureau forecasts that baby boomers will comprise roughly 21% of the expected U.S. population in 2030 — good for more than 73 million people. By then every boomer will be over 65 years of age, and that generation should continue collectively exerting pronounced control over the country’s financial landscape.
Financial institutions will have to balance catering not only to younger generations with strong digital preferences but also to elder generations still likely to desire in-person experiences.

Advisors are on the move

Just as the possession of wealth is anticipated to shift drastically, those who advise on its deployment may soon pass the baton as well. Cerulli predicts that 37% of financial advisors will retire over the next 10 years, and says 1 in 4 of those soon-to-be retirees don’t have a concrete succession plan in place. That’s not the only impetus for change. Many financial advisors are also expected to continue migrating to registered investment advisor (RIA) firms. In 2010, financial advisors affiliated with RIAs constituted 16% of the total financial advisor pool. By 2020, that number had expanded to 24% — and McKinsey predicts it will reach 26% by 2025. This carries far-reaching implications that lie well beyond individual households moving to another advisor or wealth management firm: The entire financial services industry will likely need to adapt. Combined, these underlying trends are poised to shape the financial services industry for the foreseeable future. The institutions best positioned to take advantage will effectively marry operational needs with a blend of digital capabilities. While wealth management may be a subjective, multifaceted subject, one thing seems clear across the board: People want more control, transparency, and decision-making abilities. Technology is the key to meeting these demands.

The Hybrid Model: A Holistic Solution to Meeting Affluent Client Needs

The affluent are hardly an ignored cohort, but their proclivities may be overlooked or misunderstood by financial institutions. In particular, many high net worth individuals appear to prefer a seemingly contradictory approach to investing — overseeing self-directed accounts while also working with a traditional advisor, either remotely or in person.
Conventional wisdom would suggest that the need to handle one’s own finances diminishes as wealth increases, but statistics show otherwise. The level of self-guided financial planning actually rises alongside investable assets, according to a survey of affluent households by Javelin Strategy & Research.
In that vein, there’s a strong correlation between clients who frequently engage with their advisors and those who explore off-platform financial planning (68% of respondents), according to Javelin. In other words, investors who meet frequently with their advisors also tend to use third-party financial management tools.
Additionally, 77% of respondents to McKinsey’s Affluent and High Net Worth Consumer Insights Survey indicated they preferred to primarily correspond with their advisors through either a digital medium (website or app) or a remote channel (email, phone, video conference). And 50% of clients under the age of 45 were comfortable with digital-only advice.
In short, there’s a strong case for adopting a hybrid model that prioritizes digital capabilities, and this may be the key to growth and longevity for financial institutions over the next decade and beyond.

The battle of consolidation

On top of professional guidance, more and more affluent investors want the two Cs — convenience and control — and not just from an investing standpoint. The individuals in this high net worth, digitally attuned cohort want to consolidate their finances.
Per McKinsey’s survey, respondents aged 25 to 44 indicated a strong preference for combining their banking and investing relationships, whether they had less than $1 million or as much as $25 million across their accounts. For instance, 70% of respondents with investable assets of $5 million to $25 million wanted to invest with a firm with which they also had a banking relationship. Significant wealth wasn’t the sole determinant, though. Even the majority of those with less than $1 million of investable assets desired a singular financial relationship.
That said, there’s a key discrepancy: the institution of choice for consolidation.
Younger investors would rather consolidate wealth management with their primary bank provider, according to McKinsey, while older investors and those with sizable net worth figures are more likely to do the opposite, merging banking services with their primary wealth-management provider.
In either case, the path to differentiation is personalization, which McKinsey says is the third-highest factor for clients seeking out professional guidance, regardless of age. By making the right technological investments, institutions can o er highly customizable, tax-efficient solutions at scale.

Who’s winning the battle of consolidation?

The fight to offer holistic solutions is already underway. On the wealth management front, many of the largest institutions have sought to appeal to the younger, mass-affluent segment by investing in digital engagement.
For instance, in 2020, Edward Jones announced a $500 million investment into
transforming its digital offerings, including the introduction of new tools and features to enhance client-advisor relationships. These included financial goal progress trackers, account aggregation, cash management, and secure communications through the client portal.

Technology is Here to Stay, but Which Features Should Institutions Target?

Technology and financial services are inextricably linked. But we won’t see
tech-driven solutions like robo-advisory outright replace financial advisors. It’s not a zero-sum game. It’s a complementary relationship. That’s true from the perspective of the end client and of the financial institution.
50% of high net worth and affluent clients think their primary wealth manager should improve their digital capabilities, from personalized offerings and omnichannel access to account consolidation and integrated services. Advisors share this sentiment — 87% of advisors want more digital capabilities, such as tools backed by artificial intelligence that can streamline mundane or complex processes.
“In the end, investor digital migration strengthens, not replaces, the advisor relationship, and elevates the advisory value proposition by facilitating incremental collaboration,” says Greg O’Gara of Javelin Strategy & Research. “Advisor recommendations can be independently validated, and investor questions that arise can otherwise be discussed in a virtuous cycle with the advisor.”
Let’s explore which capabilities financial institutions should prioritize.

Account aggregation and data analytics

The data supports building out account aggregation functionality and data analytics. Investors want a comprehensive view of their finances, and they can more effortlessly grasp the big picture through a unified lens rather than via scattered, multi-platform accounts.
Broadly speaking, account aggregation software has reached a point of mass adoption. According to a Kitces Research survey, more than 60% of respondents had adopted account aggregation software, but collective satisfaction was mediocre (a little over 6.5 on a 10-point scale). This suggests an opportunity for improvement, whether that’s through in-house development or outsourcing with a properly vetted vendor.

Data gathering and onboarding

While it’s reasonable to say AI hasn’t reached its full potential yet, one thing is certain — AI can streamline trivial, time-consuming aspects of wealth management. That’s particularly true in the case of data gathering and onboarding.
Even firms with expansive physical footprints and in-person services can bene it from digital onboarding processes. Firms can reduce points of friction, saving clients the hassle of filling out paperwork while simultaneously negating the need for data entry and client-profile building. Automated features make it far easier to construct a thorough overview of a client’s existing investments, accounts, financial goals, risk tolerance, and so on.
Advisors rated document management and data gathering as important in the Kitces survey (both well above 7 on a 10-point scale), but adoption figures didn’t quite match that enthusiasm — more than 30% of respondents lacked document management software, while about 75% lacked data-gathering software.

Automated insights

The strategic deployment of automated tools can simplify a wealth manager’s life in terms of managing paperwork and bringing on new clients. But the bene it extends beyond the reduction of document-riddled tasks. AI technology can assist with daily monitoring and real-time alerts, too. In fact, advisors ranked real-time notification of client life events as a primary bene it of AI. These could range from unexpected cash deposits that need allocating to a drifting portfolio that requires rebalancing. Moreover, advisors ranked plan monitoring software as important in the Kitces survey (almost 7.5 on a 10-point scale), yet fewer than 10% of respondents had adopted this type of software.

Tax and compliance

Tax-optimized solutions can help pinpoint efficient, return-friendly paths forward.
For instance, automated tax-loss harvesting may uncover significant savings, potentially reducing an investor’s liability come tax time.
In terms of adoption, tax and compliance technology are on the lower end, according to Kitces (both under 40%), but these facets of financial management are objectively important (between 8 and 8.5), not just from a regulatory standpoint for an advisor but also in terms of a client’s net returns.

Narrowing the Divide: Technology Paves the Way to Streamlined Financial Services

Financial institutions are making progress in terms of consolidating financial management for their clients and bolstering their client portals with key features. But there’s still work to be done.
Banking customers are typically satisfied with their provider’s digital offerings when it comes to day-to-day money management. However, longer-term financial planning left much to be desired — according to Javelin data, only 55% were satisfied, driving roughly 4 in every 10 customers to third-party solutions. Wealth-management firms tend to su er the same fate: More than two-thirds of investors needed to use third-party apps to manage their money out of necessity, citing functional constraints and poor user experiences, according to Javelin.
While supply and demand may have an inverse economic relationship, that’s not
necessarily the case with respect to financial technology and financial management. The more options there are at an individual’s disposal, the higher those options can raise the bar. In other words, the abundance of third-party fintech solutions puts inordinate pressure on institutions to meet client demands — if your platform can’t deliver the features people want, they’ll look elsewhere.
Bucking these trends starts with the strategic deployment of state-of-the-art technology. For both wealth managers and bankers, partnering with a fintech provider can help not only navigate the aforementioned legacy tech and integration hurdles but also transform your digital platform to accommodate the hybrid needs of affluent clients.
We can help with that.
With SigFig’s Digital Advice Pro, advisors and bankers can streamline the client experience through features like digital onboarding and automated rebalancing, while also offering risk-aware, tax-efficient solutions at scale. In turn, institutions can continue leaning into their core functions while taking advantage of opportunities to expand client relationships through complementary offerings.

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