SINGAPORE (June 1): Wealth managers are not doing enough to keep up with their technologically-savvy clients. If they don’t buck up, they won’t survive, says PwC in a strongly-worded report.

“Globally, wealth management is one of the least tech-literate sectors of the financial services industry, and is falling well behind non-financial services industries,” states PwC.

The professional firms came to this conclusion following research based on more than 1,000 high net worth individuals worldwide and interviews with 100 relationship managers, CEOs of wealth management firms and FinTech innovators.

Citing the study, ‘Sink or swim: why wealth management can’t afford to miss the digital wave’, just a quarter of the wealth management firms offer digital channels beyond email.

The demand for wider range of digital channel offerings is stronger from clients 45 years old and below.

Worldwide, 55% of the clients, and 62% from Asia Pacific, think it is important for their wealth managers to have a strong digital offering. For those 45 and below, this portion increases to 64%.

Of those under 45 globally, 47% of those who do not currently use robo services would consider using them in the future. By contrast, globally two-thirds of wealth relationship managers do not consider robo-advisors a threat to their business.

“Moreover, they repeatedly insist clients do not want digital functionality, directly contradicting the importance their clients place on it,” states PwC.

The much-vaunted client-advisor relationship is not always tamper-proof. “Investment performance”, according to the respondents across the board, is the most valued aspect of engaging wealth managers.

However for clients in Asia Pacific, they rate “range of products and services” offered by their wealth managers as the second most important attribute, with 61% indicating so, versus 47% worldwide. By contrast “rapport with advisor”, an attribute rated second most important worldwide with 50%, figures only for 41% for those in Asia Pacific.

“With a client-base that feels only weak affiliation to its chosen providers, the sector is now acutely vulnerable to digital innovation from FinTech incomers, including robo-advice services which may be able to offer a closer watch on investment performance and offer a broader range of products and services,” cautions PwC’s Justin Ong.

“Ignoring this state of affairs is not an option. If firms do not respond now, they simply will not survive in the medium to long term,” adds Ong, who is PwC’s Asia Pacific Asset and Wealth Management leader.

The way PwC sees it, wealth managers need to step up on introducing a “comprehensive digital infrastructure”, which integrates “every aspect” of their firm’s activities and corporate culture, stringing up everything from how their back office works to how they market new prospects.

The wealth managers should also be willing to partner with FinTech companies so that they can deliver new technologies to clients at the speed they expect.

To be sure, wealth managers are not absolutely doing nothing in beefing up their technological capabilities. Leading names in this field from UBS to Credit Suisse have been investing in their digital channels.

“Over the past year, we've seen a number of the local wealth management players start to make inroads into better use of technology and analytics to enhance client experience and improve account penetration,” says Julia Leong, Private Banking leader at PwC Singapore.

Even so, the broader industry remains in its “infancy” in adopting new digital technologies. “The good news is that there is now an accepted view by wealth management players that they cannot afford to miss the boat on this, and we have seen increased investment budgets and spend to address this gap,” says Leong.