The finance and investment industry has profoundly transformed over the past few decades. This change has been driven by a deeper understanding of individual investor needs, leading to a shift in wealth management towards more personalised solutions.
51% of investors between the ages of 35 to 54 and 64% of millennials are willing to pay more for personalised investing services and products (According to research by Refinitiv), This shift in investor expectations clearly indicates the evolving market trends, where personalisation is swiftly becoming a standard rather than a preference.
Historically, wealth management was initially a one-size-fits-all approach. However, the need for personalised investment strategies grew as monetary markets became more complicated and traders more systematic.
Personalised wealth management solutions are not a luxury but a necessity. They cater to each investor's specific monetary desires, risk tolerance, and preferences, imparting customised advice that could drastically enhance investment outcomes.
Every investor is specific, with wonderful goals, possibilities, and expectations. Some may also prioritise long-term boom, while others may additionally pay attention to income generation or change mitigation. Tailoring investment experiences to fulfil these particular wishes is important. PwC says personalised wealth management solutions can extensively enhance consumer satisfaction and loyalty. (PricewaterhouseCoopers, 2024).
Personalised investment advice offers numerous benefits. McKinsey & Company reports that personalised solutions can enhance consumer satisfaction by as much as 30% and increase revenue by up to 15%. Moreover, according to Vanguard, personalised investment techniques can create better-diversified portfolios, including up to 3% in internet returns over time. (McKinsey & Company, 2021)
Personalised funding advice enhances the general investor experience. Investors feel extra concerned and in control regarding their monetary choices, leading to better confidence while choosing funds. An EY survey found that 80% of investors value personalised advice, and 70% are willing to pay more for it. This accelerated involvement and confidence translate to higher satisfaction and loyalty. (Intelliflo, 2024).
Offering personalised funding recommendations for monetary advisors and wealth managers can lead to more potent customer relationships. Personalised services can increase client retention and generate referrals, differentiating advisors from their competition. This more profound connection to clients fosters trust and long-term engagement.
Financial advisers can improve their service offerings by creating individualised experiences using technology. According to NexJ Systems, advisers can create comprehensive customer profiles using digital platforms, artificial intelligence, and data analytics. These technologies make it possible to provide highly customised investment strategies and gain a deeper understanding of clients' demands.
Putting individualised investing advice into practice requires a multifaceted strategy:
Artificial intelligence (AI) and data analysis technologies are important components of digital platforms. These systems can evaluate risk tolerance, examine customer data, and provide tailored financial advice. Mobile apps and tools that use natural language processing (NLP) can also improve the customer experience, as they can provide real-time information and allow for personalised contact.
Client segmentation entails grouping customers according to shared traits like age, financial objectives, or risk tolerance. With this strategy, advisers can tailor services and communications to each segment's unique requirements. Investment advice from advisors is more pertinent and valuable when they are aware of the distinctive characteristics of various clientele groups.
Regular encounters with clients are necessary to establish rapport and trust for individualised advice to be effective. Advisors maintain alignment with client expectations by using feedback to improve services. Deloitte's Acquisition.AI emphasises the value of ongoing interaction and feedback loops in enhancing the customer experience.
The bottom line of wealth management is to deliver largely customised investment recommendations that go beyond traditional segmentation. This requires a more profound knowledge of individual investors, encompassing their financial data and their preferences, values, and behavioural patterns.
Wealth managers should accumulate a complete range of customer information to benefit from hyper-personalisation. This comprises designated personas, values, ideals, behavioural information, and transactional data. However, acquiring and effectively utilising this data presents significant challenges.
Advanced technologies like AI, machine learning, and behavioural sciences are essential for extracting valuable insights from this complex information. By studying customer patterns and possibilities, wealth managers can discover particular funding opportunities and tailor their suggested strategies.
Leading financial establishments are already embracing data-driven hyper-personalisation. Morgan Stanley, for example, has evolved an NBA-inspired personal recommendation system to enhance advisor abilities. Additionally, constructing propensity models can assist in predicting customer behaviour, bearing in mind proactive engagement and preventing client attrition.
Personalised investing advice has many potential advantages. However, some drawbacks and misconceptions need to be addressed:
1) Cost and Complexity: Some may consider personalised investing advice costly and unavailable. But thanks to the emergence of digital asset management platforms, more investors can now afford these services. Furthermore, according to Accenture, 75% of investors think receiving individualised investment advice helps them better comprehend their financial circumstances.
2) Sustainable Investing: Incorporating sustainable investing ideas into customised portfolios is becoming increasingly crucial. Research indicates that for the last ten years, sustainable funds have outperformed regular funds (Morningstar). Personalised wealth management includes matching financial objectives and personal values with investing choices.
Final Words
Wealth management will indeed become highly personalised in the future. Investments in data, analytics, and AI projects are essential for wealth managers and financial advisors to prosper in this changing environment. Advisors may surpass clients' expectations and create enduring relationships by offering logical, personalised financial advice focusing on focused follow-through.
Personalised investment advice is a necessity rather than merely a trend. Wealth managers can assist customers in reaching their financial goals and laying a solid basis for their financial future by comprehending and meeting each investor's specific demands.
Sources:
Refinitiv: 64% of millennials and 51% in the 35-54 age bracket are willing to pay more for personalised investing products and services -Asian Wealth Management and Asian Private Banking. (n.d.). https://www.hubbis.com/news/refinitiv-64-of-millennials-and-51-in-the-35-54-age-bracket-are-willing-to-pay-more-for-personalised-investing-products-and-services
PricewaterhouseCoopers. (2024). Asset and wealth management revolution 2024 | PwC Global. PwC. https://www.pwc.com/gx/en/issues/transformation/asset-and-wealth-management-revolution.html
‌McKinsey & Company. (2021, November 12). The Value of Getting Personalization right--or wrong--is Multiplying. McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying
The art of personalizing financial advice in an outsourced and automated world. (2024). Retrieved January 9, 2025, from https://pages.intelliflo.com/rs/963-XZK-787/images/us-wp-intelliflo-managed_art-of-personalization.pdf?version=0
Ibrahim, A. (2024). Personalization in Fintech Marketing: Engaging the Modern Consumer.
CFA, H. B. (2020, June 16). Do Sustainable Funds Beat their Rivals? Morningstar UK. https://www.morningstar.co.uk/uk/news/203214/do-sustainable-funds-beat-their-rivals.aspx