Disruption path to customer trust
The biggest threat to the wealth management industry is trust, not digital disruption, according to Deloitte Innovation Council chairman, Peter Williams.
Speaking at Money Management's Platforms and Wraps conference yesterday, Williams argued that the trajectory of the wealth management industry has seen rising customer expectations coupled with a growing disenchantment with traditional financial planners, particularly as consumers seek more intuitive offerings from agile and intelligent digital competitors.
"The world has changed immutably but we are not actually seeing customers and business engaged that well … The wealth management industry is going to grow like crazy [and] it is going to be driven by digital almost like no other," Williams said.
"We are becoming used to things being automatically invoked. The key issue we are faced with today is: do I trust these financial planners?"
Williams argued that the financial services sector in Australia was a "real hotbed" ripe for disruption, particularly in terms of the way in which "more nimble and agile" digital competitors used data to tailor their solutions to customers.
"Banks and financial services institutions keep asking me questions about things they already have the data on," Williams said.
"My expectation is Spotify, Netflix, Amazon … I give Amazon plenty of data because they use my data to really help me based on my preferences."
A key trend in the industry has seen the shift towards the implementation of robo-advice and algorithmic planning tools, however, Williams cautioned against assuming that new-age robo-advisors will replace traditional financial planning incumbents.
"Robots are easier to deal with. If you want trust, you can trust a robot because that robot is going to work from what you give it," he said.
"However, our belief is that really outstanding advisors working with these robo-advice algorithms and tools is where the industry is going to go over the next few years."
According to Williams, the pace of change in the wealth management industry is accelerating and in order to establish trust with the modern day customer, advisors will need to embrace innovation by redefining their business models and learning from the process.
"Playing catch-up once the others have already created the market position and dominance is not going to cut it. Disruption happens slowly [at first], until it happens fast," he said.
"You need to work out what is in the way of disruption and advance it because if you want to be part of the future, you need to get in harm's way and then shape it."
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