A Market In Transition: Digital wealth awareness is rising but only slowly.

Putting the cart before the horse by simply creating a digital wealth platform won’t drive customers to this channel. Too often our clients are inclined to look at digital wealth offers, automated investing platforms and robo-advisors through the lens of account acquisition and Assets Under Management. Evaluating these innovations to wealth management approaches this way makes it easy to dismiss them as a novel fad, passing trend, or simply as a small component into a much broader advisor based wealth management operating model.

Many industry players may agree on the merits and value of passive investing and automated portfolio management delivered in digital channels. However, the premise and value is not yet being communicated to consumers in a way to adequately break through and drive traction. Moreover, are businesses themselves approaching these innovations in the most strategically optimal ways? The fact that these platforms are “hands-free” doesn’t effectively describe the true inherent value of a digital wealth management service. After-all, mutual funds are “hands-free” too. No, automation is valuable in the context of personalization because it provides much of the quality of personal human wealth management services at a low cost. Low cost in fees; in time; and in maintenance of trust.

ParameterInsights research is showing that, in Canada, usage of a digital wealth advisor more than doubles among those with a human advisor compared to those without a human advisor. In the US, the difference is even more dramatic. Americans with a human financial advisor are more than five times as likely as those without an advisor to be a client of an automated portfolio management platform. These findings support the idea that among the investing public, clients are exploring multiple options and assessing value as they go.

But there’s much work to be done. Only about 10 percent of the North American investing age population have enough knowledge and awareness of digital wealth management services to trigger consumption. Building awareness of these innovations amongst the investing and saving public is a critical first step required for these valuable wealth management innovations to gain traction. Once the needle moves on the 55% of people who have absolutely no idea about these developments we suspect that preferences for types of wealth management features will switch as the value equation changes.

To learn more about this and other aspects like which firms are winning the war of consumer attention and why, please reach out to us at info@parameterinsights.com or visit us at www.parameterinsights.com.