By Josh Book

The advent of digital has forever changed the category of wealth management. Products are now more accessible, more transparent, and more readily adaptable to consumers’ shifting needs and preferences. Unfortunately, this message hasn’t yet gotten through to consumers.

It’s the downside of what can happen when a category name becomes a polarizing buzzword. The high-level definition we use to describe online wealth advice offers is “a type of computerized financial advisor providing investment advice and online portfolio management services with little to no human involvement.” This is essentially what pundits have termed “robo-advising.” Though the evolution of the category has now outpaced the language originally used to describe it, for better or worse, the “robo” terminology has become entrenched in North America.

According to new consumer research at ParameterInsights, mentions of “robo” terminology continued to dominate online social discussion of the wealth management category in 2017. This occurred despite the category’s explosion of new innovations and entrants--hybrid products that add human-delivered advisory capabilities alongside automation-focused wealth management services, and traditional wealth management firms who increasingly deliver services digitally.

One of the reasons for this continued category misperception, we’ve found through our proprietary market research, is that firms continue to focus their marketing messages on largely non-differentiating rational features such as low fees and benefits like portfolio automation.  

This has led to the rather unique situation we uncovered in our recent research—consumers report low familiarity with the general concept of robo-advising, yet at the same time they have moderate to strong brand awareness of leading firms within the category. As the table below shows, consumers are able to recognize digital wealth advisory brands, but they don’t really understand what they are being offered.

According to ParameterInsights’ data, this is the challenge associated with having an “if you build it, they will come” mentality. While consumers may recognize your name from marketing efforts, most consumers simply aren’t familiar enough with the basic tenets of wealth management (let alone basic finance) to feel comfortable enough to engage with your product.

This research makes clear the challenge ahead for digital wealth management firms is to better educate and engage with consumers by creating and communicating truly innovative and holistic offers that meet broad consumer needs. To convert prospects and retain customers, it’s simply not enough to add digital to existing products and services.

As the category expands to cover a more holistic spectrum of wealth management service delivery options, the crucial first steps firms must take are to make consumers feel that wealth management is now more accessible, more transparent, and readily adaptable to their shifting needs and preferences. Is your firm’s strategy tailored to meet this challenge?

To learn more about our data and research please start a conversation with us.