With a variety of industries facing the necessity of digital transformation, the wealth management industry is undergoing a particularly significant transformation. As control of assets shifts from older customers to their often more tech-savvy children, the industry's traditional products and services are increasingly considered outdated. As a result, Info-Tech Research Group advises that wealth management firms must pivot to meet these changing demands. Info-Tech has published The Future of Wealth Management, a trends report providing insight into current customer expectations and outlining pathways businesses can take to implement digital transformation to stay competitive in the evolving landscape.

In the report, Info-Tech explains that the wealth management industry has traditionally relied on a combination of outsourced service providers and bespoke internal systems. However, these systems were not initially designed to provide the depth of integration necessary for modern digital products and services.

"The wealth management industry has serviced its customers with traditional products and services that were largely segmented by the amount of assets in the account, and that often had a single decision maker," explains David Tomljenovic, principal research director at Info-Tech Research Group. "Engagement was heavily focused on in-person calls or meetings. Client assets were invested according to model portfolios based on customer assets, intake forms, and 'know your client' information. However, younger customers expect robust digital or mobile tools that deliver highly optimized processes, products, and customer experiences."

Currently in the industry, IT's role is typically focused on support rather than on functioning as a strategic business partner. Therefore, there is a pressing need for IT to evolve its approach and foster a relationship that aligns more closely with the overarching, long-term business objectives of wealth management firms.

"One common point between both the traditional customer generation and the younger generation taking over is the desire for in-person engagement," explains Tomljenovic. "While the investing process is becoming increasingly digital, personal contact is still an essential part of the wealth management process."

The report underscores the importance of adopting a multidimensional strategy when tackling the technological hurdles in the wealth management sector, pointing out that the profound changes required in wealth management permeate numerous aspects of IT. The complexities of the technological challenges in the industry are further amplified by the rapidly evolving market dynamics, necessitating substantial shifts throughout the organization from front-end to back-end operations. Consequently, implementing a successful, comprehensive technology transformation becomes more daunting as it involves multiple elements simultaneously.

Info-Tech advises that these transformational areas can be broadly categorized into three main dimensions, each comprising four components:

● Organizational Dimension: Collectively, these components govern how IT organizes itself and aligns with business needs to drive deep and effective delivery. This dimension is comprised of innovation, enterprise architecture (EA), agile, and DevOps methodologies.

● Experience Dimension: The key capabilities that are required to drive the extensive user experience transformation that wealth management customers are demanding. The experience dimension includes data, artificial intelligence (AI) and machine learning (ML), automation, and security.

● Infrastructure Dimension: Organizations need to master these capabilities to support current customer demands to effectively deliver open, integration-friendly, and ecosystem-based customer solutions. Infrastructure is an essential part of the transformation process. The key components are ecosystem, cloud, integration, and digital.

The firm also highlights in the report that the generational wealth transfer presents a significant opportunity for wealth management firms that can adeptly navigate this transition. Timing the rollout of new digital products and services to cater to the needs of younger, digitally savvy customers will be instrumental in driving success in a new era.

To learn more about the firm's findings and the recommendations for how IT can help wealth management firms stay current in the digital era, download the complete The Future of Wealth Management trends report.