Online rivals and investor evolution pose challenge for wealth managers

It’s been a time of massive change for wealth managers, with many now working remotely. Online rivals and cybersecurity threats have only heightened the challenge 


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The past two years of Covid chaos have been a bucket of cold water for wealth management. Not only has the pandemic indelibly changed how the industry does business – clients are reassessing how they invest their money.

The industry aims to bring surety and clarity to its clientele. However, it’s faced a challenging environment over the past year as it has shifted to remote working. Meanwhile, the explosion in meme stocks, trading platforms and cryptocurrencies means it faces huge competition in its ecosystem. 

On the one hand, managers have led clients through the necessary data protection and security documents. On the other, they’ve listened as the same client outlines their investments in the unregulated and lawless world of cryptocurrencies and non-fungible tokens (NFTs). 

Online users today want two competing factors from remote-working wealth managers - quick access to their money and the certainty that that cash is protected. Marrying these demands has been the biggest challenge for wealth management during remote working.

Know your platforms

Smart wealth managers can achieve this by ensuring different systems can seamlessly talk to each other, says Alexander Newton, managing partner for

Cambria Wealth Management. “Knowing that you only need to enter details in one system not only saves time, it also helps to reduce error by ensuring that we are all working on the same client data. Continuing to link systems to gain efficiencies and improve the client experience is a never-ending task.”

Successful wealth managers now offer hybrid advice via a pick and mix of communications, ensuring the customer gets what they want, when they want it. Video conferencing gives personality and face-to-face access. Messaging and collaboration tools like Microsoft Teams and Webex enable instant access, while products like Docusign or Alt Ave allow for electronic signing of documents. On the bespoke end, sophisticated client portals have also appeared, allowing advisers and clients to work together through integrated video and screen-sharing, says Tim Thompson Rye, chief technology officer at Progeny.

“MoneyInfo and CashCalc have the ability to transform the client experience pretty much overnight. The key benefits of these off-the-shelf options are instant access to information like portfolio valuations, the ability to sign, store and access important documents securely, and the ability to communicate with advisers securely.”

Technology has changed the way clients think about their finances – and the way finance thinks about them, says Thompson Rye. “Surprisingly, we found the average age of clients who use our portal is older than our overall average client age. Older clients may be more time-poor than younger generations and therefore value the convenience to information that a tech-led offering can provide. This goes against the perception, or misconception, that technology will primarily be used by younger clients.”

Digital advantage 

In terms of compliance, digital offerings can record all client interactions, all of which can be married up to client files, says Newton. “One of the benefits of combining messaging, email and video calls is we now have a more reliable audit trail of our advice process. This links well with our back-office systems, which automatically log messages to client files. This doesn’t remove the issue of human error but does significantly reduce risk.”

However, every item recorded creates a larger surface area for cybercriminals to attack, with such incidents up 238% globally during the first two months of the pandemic, says James McQuiggan, security awareness advocate at KnowBe4.

“Organisations have shifted data and systems to more cloud-based solutions for easier manageability and reduced costs,” he says. However, with more users working remotely and more data in the cloud, the opportunity for cybercriminals to attack them as they are isolated increases. This risk exposes the organisation to various social engineering and phishing attacks or exploits against the internet-facing cloud systems.”

As financial education becomes more available and easier to access, we envisage people being in the driver’s seat of their own financial journey

While his company invests heavily in cybersecurity, Thompson Rye admits Progeny is defending against more scams targeting end clients, who may be more vulnerable or have less access to cybersecurity knowledge and training. “We have a robust cybersecurity training programme and have stepped up our client communications about potential cyber risks,” he says.

To continue offering advice outside office hours, many firms have implemented secure chat systems that can only be used by verified clients. This is backed up through courtesy and security calls, says Newton. “We still rely on backing up our digital interactions with a phone or video call. For any particularly sensitive situations, our clients still need to feel that they are dealing with a person, rather than a computer.”

Unpredictable competition

Remote wealth management also faces the challenge of competing advice – good or bad – from the internet. During August, shares in trading platform Robinhood increased by 50% in a single day, buoyed by ‘meme stock’ episodes – like the furore around GameStop – as work from home users became exposed to new products. 

The biggest threat to remote wealth management could stem from the low interest rate environment, with many people tempted to spin the wheel on the casino of online trading risk, says Anna-Sophie Hartvigsen, co-founder of Female Invest, an advice portal aimed at Gen Z and millennial women. “We’re seeing a generation of new investors who take charge of their wealth themselves rather than delegating the responsibility to external sources.”

With increased working from home, users also have more time to seek out alternative investment opportunities and do their own study. During the pandemic, massive wins for trading items like Dogecoin, Shiba Inu and GameStop shares became crossover news events, as investors sought both financial gain and an adrenaline rush, says Hartvigsen .“Investing has increasingly become a topic on social media, which led to the emergence of a new phenomenon: meme stocks. As financial education becomes more available and easier to access, we envisage people being in the driver’s seat of their own financial journey to a much higher extent than before.”

To survive, remote wealth management should match these trends, not resist them. It must offer sanity and calm amid the chaos of online investing, as well as providing the traditional standards of security that customers have grown to expect.