The Arrival of Digital Wealth Management

As per a recent report, India has the fastest growing number of millionaires in the world. This basically means that the number of high net worth individuals (HNIs) is constantly growing. The growing number of these HNIs, has paved the way for banking and finance institutions to give up traditional methods of asset and wealth management, thus paving a path for the user-friendly and convenient world of digital wealth management. But before we dwell into the need for digital wealth management, let’s get a basic understanding of what is wealth management?

What is wealth management?

Simply put, wealth management is a high-end professional service which combines investment and financial counseling, along with tax and accounting services, and retirement planning. It also includes estate and legal planning, all of which is done for one set fee. The services are mostly used by HNIs who work with a dedicated wealth manager who gives his recommendations for allotting funds based on inputs from financial experts, including taking tips from the attorney, insurance agent and accountants of the client. A few wealth managers may also provide banking services, while others may guide you about philanthropic activities.

What is digital wealth management?

In an age of increased competition in the financial markets and decreased fees, financial advisors must rely on several digital tools in order to survive. Such advisors and institutions can sustain a profitable growth by leveraging technology with data-driven insights. To achieve this vision, companies are making wealth management products and services available on digital platforms, which have become most popular with the web-age investors. Combining a thoughtful data and technology strategy along with user friendly tools, makes wealth management a bit easier for the investor, thus reducing several hours of debates and conversations with wealth managers. It is now, only a matter of time until the whole world adopts digital methods of wealth management.

The need to get comfortable with digital wealth management

More and more companies and their clients are getting comfortable with using a mix of both, digital and offline methods of communicating with one another. It is essential, even for traditional wealth managers to be able to familiarize themselves with the changing digital ecosystems, so that they can also encourage those HNIs who still prefer traditional methods to go digital too.  Of course, the changing market conditions, coupled with several economic factors have also contributed to this need to turn digital. Let’s take a look at these factors.

New regulations and diminished profitability – The current financial condition in India has been changing speedily which has caused investors to become distrustful and panic stricken, with little faith in the volatile economy. This was largely observed during the demonetization of 2016 and the introduction of new currency. Additional factors like changing tax structures, introduction of GST and several other factors have also led to investors doubting stability and profitability of investment options. As such, financial institutions have learnt that transparency has become an important factor in integrating technology for all transactions, which is why they have been adopting rapid digital wealth management regulations.

Changing profiles of the customer – A large number of HNIs are of the opinion that digitalization of wealth management services is the way to go. They consider digitalization a positive approach, but would still like to keep meeting their wealth managers from time to time. For any business to profit it is integral for them to understand the requirements of the client and give them an engaging experience. Investors today prefer to control their investments on their own, with some guidance from wealth managers. They also insist on confidentiality and high quality services. These demanding customers, who take up less time of the wealth managers, have contributed to the emergence of digital wealth management.

The need to rebuild trust – Traditional wealth managers usually commanded respect and trust from the investors because of the unavailability of digital management. But in the new age, investors have begun to notice the poor communication skills of the managers and the former lack of transparency when it comes to procuring wealth management products. Wealth managers have been working hard to re-establish this trust and in order to do so, they have been relying on social media as an effective brand building tool. Investors are able to obtain investment data and have a continued dialogue with their wealth managers thanks to these social media tools, thus recreating an environment of trust.

The changing models of businesses – The HNIs of today’s generation are well read, prompt and informed with respect to the changing trends in the market. To tap into the rapidly evolving external environment of a company, these investors also keep making rapid changes to their business models. This contributed to the need for fast moving investment necessities. To be able to meet these necessities efficiently, the use of technologically advanced tools is extremely important.

How is digitalization changing wealth management?

Needless to say, the tech savvy generation of investors prefers to conduct their transactions and interactions online, on their smartphones. Investor functioning has rapidly changed thanks to digital presence. Investors prefer to find their investment options on the web and take quick, albeit sometimes risky decisions with a little assistance from technology. This efficient working culture has also contributed to the below mentioned changes in the world of wealth management.

The boost in efficiency: Both, investors as well as wealth managers are benefiting from digitalization. Investors can hold a dynamic portfolio at any time since digitalization has been streamlining the communication process of the investment idea between both parties. Readily available, updated information coupled with quick analysis tools have boosted efficiency while errors are reduced due to regular electronic audits. Investments can now be tracked with little effort.

Well-structured data: With a single click, a user can access a large amount of data of any year of their investment. Client interaction has increased yet; the costs of interaction are lower since wealth managers are providing wealth management products using sophisticated systems such as cloud computing, mobile applications and social media. Investors can make intelligent investment decisions and also get transparency of information due to this well-structured data.

Varied roles of the wealth manager: The roles of wealth managers have entirely changed due to digitalization. Wealth managers no longer serve as the main source of information for an investor. In fact, investors prefer to find out their investment options by going online and researching various websites, reading research papers online or watching videos about company management. With just a few clicks on the keyboard, an investor can get immeasurable data from across the globe, from thousands of online sources. Wealth management is no longer a routine administrative job;in fact, it serves as a sophisticated advisory activity which is directly responsible for addressing any needs and concerns of their investors.

In conclusion: Investors who are still relying on the old school methods of investing and buying wealth management products are not benefiting. Such investors, adamant to adapting to the changing times are losing out on tapping several new opportunities of optimizing the risk-return profile in their portfolios. As long as you have good telephone connectivity and a digitally well-equipped expert, with the attitude to adapt to changes, you can benefit from digitalization. Rest assured that your wealth manager has the best interest in growing your corpus.

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1 Response

  1. Sasmita says:


    Its a great article on digital wealth management. Digital technology made the world a smaller place. We can quickly get communicate with other people despite the distance. So, Digital Technology also helps to manage wealth in an error-free manner. As it’s not a manual work so we have to use tools to do it..

    Here I am suggesting you use slickAccount, it’s the best tool for Finance Management SlickAccount. It offers awesome features like monthly & weekly cash flow management, budgeting & forecasting, financial planning, project management & profitability & more.. Try this software..

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