A global report by one of the big four accounting firms indicates wealth management is one of the least tech-literate sectors in financial services, with urgent action needed as relationship managers are "dangerously overestimating" their firms' digital capabilities.
According to the report, titled Sink or swim: Why wealth management can't afford to miss the digital wave, 69 per cent of high-net-worth individuals (HNWIs) are now using online and mobile banking, but only a quarter of advisers offer digital channels beyond email.
Further, 47 per cent of those who do not use robo-services said they would consider using them in the future.
"To survive in a digital world that is evolving at breakneck speed, wealth management firms urgently need to take action to demonstrate their value to existing and future clients – and to keep pace with the new waves of digital opportunities that are emerging," the report states.
At the same time, the report shows that many relationship managers are overestimating their firms' digital offering.
"Some rate their business as digitally advanced when the only service offered to clients is a website," PwC said.
"Low digital literacy throughout the sector means that most relationship managers cannot perceive their adoption of technology extending beyond tools to reduce their administrative burden."
Among wealth management CEOs, however, there are glimmerings of a digital vision, even though urgency is lacking to make it a reality.
"Internal pressure for wealth management firms to make a fundamental shift to digital is still largely absent. At the top, CEOs recognise the importance of digital but primarily only at an operational level," the report said.
"Meanwhile, on the ground, relationship managers are actively resistant to the advent of digital, seeing it largely as a binary 'them or us' threat to their own roles."
Nevertheless, PwC said there are emerging opportunities for advice firms, including combining the best of technological and human capital.
For instance, high touch is still the wealth management sector's main differentiator and robo-advice tools could help free up advisers to focus on this. There is also an opportunity for advisers to become data custodians.
"We envisage high potential for wealth managers to become data custodians – trusted recipients of a vast range of HNWI information that will allow them to offer highly responsive solutions to a broad range of client needs, both financial and non-financial," PwC said.
"Wealth managers are already recipients of an enviable level of insight about the world's wealthy – the challenge now is how to capitalise on that to consolidate their position as a trusted adviser and deliver even more relevant solutions to client needs."
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