How digital access and investing with purpose have become a requirement when looking for a wealth management provider

In 2021, one-third of investors moved at least 20% of their funds to a new provider whose offerings better matched their needs.

That’s an eye-opening statistic which asks an important question—what are investors looking for in wealth management providers (WMPs) that they’re not getting? Deloitte recently partnered with ESI ThoughtLab and other industry leaders to answer this and many other questions in a recent report1: Wealth and Asset Management 4.0. This blog post will explore some key takeaways from that report, as well as a crucial connection between those takeaways.

We are living through a period of disruption that will ultimately redefine the financial services industry. Not only has COVID accelerated digital transformation, but it has also heightened environmental concerns and awareness of social justice, equality, and inclusion. These personally held beliefs can no longer be kept distinct from business.”

- Melissa Cullen, Global Head of Strategy for Wealth and Retirement at FIS

Digital Engagement

One of the most important insights from the new report is debunking the myth that digital channels are only preferred by young and mass-market investors. The data tells a very different story.

Deloitte and ESI ThoughtLab surveyed thousands of investors asking what their preferred engagement channel would be in the future. Even when you break down the responses across billionaires, baby-boomers, or millennials, 89% of all three categories say a WMP’s mobile app will become their preferred channel. 40% of all investors say digital access has become a higher priority, and WMPs expect 75% of all their interactions with investors to be digital in the next two years.

Another important data point worth mentioning here is that 27% of investors are spreading their accounts across more WMPs. Their motivation is typically to mitigate risk, but the result is that competition for loyalty and brand strength has never been higher. Wealth firms that can efficiently and effectively engage investors on the channels they value most have an unprecedented opportunity to future-proof their businesses, and increase market share at the same time.

We all know engaging investors on the channels they value is easier said than done. But by using the right tools, like Salesforce Financial Services Cloud, WMPs can quickly stand up scalable digital engagement solutions which boosts advisor productivity.

Investing with Purpose

ESG (environmental, social, governance) investing or investing with purpose, has gained significant traction and mindshare among today’s investors. As ESG becomes less of a niche and more of a trend in the industry, it’s changing the way investors think about their WMPs. The report found that 39% of advisors say clients care about their firm’s stance on environmental and social policies. And like digital engagement, the client demographics behind this trend do not align with typical assumptions about the market.

The survey found that 32% of baby-boomers plan to invest in ESG funds in the next two years—compared to just 22% of millennials. On top of that, 27% of WMPs say clients of all ages and wealth levels are interested in ESG investing, and 34% of all investors plan to seek ESG investing advice over the next two years.

One of the reasons ESG investing is becoming more common is that a growing number of clients don’t see ESG and profitability as mutually exclusive. According to the survey, 31% of advisors say their clients believe they can achieve higher returns through their ESG investments.

All of this data points to a clear truth—investing with purpose is a trend wealth managers across the globe must keep in mind to achieve or retain their clients. WMPs would do well to consider ways they can incentivize their advisors to incorporate ESG investing into their portfolios. It’s also another use-case where Salesforce distinguishes itself from other technology solutions. With powerful AI, customer-centric data, and built-in compliance, Salesforce simplifies the logistics and operations behind scalable ESG investing.

Two Birds with One Stone

Now that we’ve summarized two of the biggest takeaways from the recent wealth management report, let’s discuss an insight that wasn’t explored in the report. The key is the underlying relationship between digital transformation and ESG investing.

By investing in digital transformation, WMPs are not only improving customer experiences and future-proofing their operations. They’re also participating in the ESG investing trend by reducing their carbon footprint (decreasing physical paperwork, embracing distributed workforces, reducing physical travel, etc). We increasingly see ESG-motivated investors wanting their WMPs to be leading the way with their own sustainability.

At first glance, some might find this insight negligible—believing that incorporating digital tools into wealth management communications and operations will have a minimal impact on the environment. But yet again, the data tells a different story.

A recent study by the World Economic Forum found that digital technology can cut global emissions by 15%. That is far from a negligible number. While financial services would only account for a portion of that 15%, the fact remains—WMPs have an opportunity to position themselves in their marketing and client relationships as partners and leaders in ESG investing by continuing to accelerate their digital transformation.

Here to Help

WMP industry leaders who are looking for ways to act on these insights don’t need to look far. Deloitte’s experienced team of digital transformation and wealth management experts are here to answer any questions or field any ideas you have about what next steps could look like. We can explore how to turn ESG investing and digital transformation from aspirational goals into practical, affordable, efficient, and effective Salesforce solutions.

Click here to dive deeper into the Wealth Management 4.0 report.

1 Unless otherwise noted, all statistics in this blog post were sourced in this report

Alison Gordon-Pollard is a partner at Deloitte Consulting LLP. She leads the Salesforce division for the insurance and wealth management sectors specializing in the design and delivery of digital transformation programs.

Michelle Feinstein is Vice President, Global Wealth Management Solutions & Strategy at Salesforce. She sits at the epicenter of strategy to define product roadmap and she advises clients on digital transformation strategies.