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Last Updated : Oct 09, 2019 08:43 AM IST | Source: Moneycontrol.com

Wealth management: Combining technology IQ with personal touch EQ key to servicing new-age clients

Firms needing to get the IQ and EQ balance right in the solutions that they provide

Soumya Rajan

There is considerable discussion and debate around how technology is transforming our lives every day, every hour. Artificial intelligence (AI), access to digital platforms and automation of processes are increasingly becoming a reality in all aspects of our lives. The mushrooming of countless fintech companies is testimony to how technology is replacing parametrised, repetitive work in financial services companies and how big banks are actively pursuing digital solutions to lower their customer acquisition, transaction and delivery costs.

As an industry veteran for over 25 years, when I first entered the wealth management space, the “relationship” aspect of managing a client was deemed paramount. You could always bring in the investment experts, but the ability to connect with the client was why a customer stayed with the organisation. Over the years, I’ve seen that change. Clients were getting more discerning. They were demanding that their wealth managers be intellectually sharper and more knowledgeable—individuals that could break down complex problems, connect the dots and find simple elegant solutions. This resulted in front-line, client-facing professionals that needed to have more technical skills. Today, we are on the cusp of one more wave of change, where technology is replacing the routine technical and analytical work. With this growing “digitisation” of the workplace, should wealth managers be wary of the future, in terms of their relevance, skillsets and the needs of their clients? And, do they need to reinvent themselves yet again?


Over the next 10 years, an estimated $15.4 trillion will transition to the NextGen. This sum is equivalent in value to the entire Chinese economy or 17 times the market capitalization of Amazon. This wealth transfer will be carried out by almost 550,000 individuals, indicating an average of $28.2m being passed on by each person. This is an unprecedented transfer of wealth to a generation of digital natives. But let’s keep these statistics aside for a moment and consider the following real-life situations – a client is getting divorced and needs help in her financial planning, a couple with considerable wealth has a special child that needs to be cared for after they are no more, the succession plan for a family owned business that entails an unequal distribution of wealth from one generation to the next, a founder who has had a significant liquidity event but has no understanding of financial or tax planning for their personal assets, a client has a deep need to channelize her wealth towards philanthropic and social good, the main breadwinner of a very successful business being tragically killed, with the family having no idea where to start in terms of picking up the pieces of either the business or personal assets.

All these are instances that many of us, as wealth practitioners, would have encountered. If I pause to think, would AI or technology, in isolation, have been able to help or solve any of the problems that these clients encountered, the answer would be a “no.”  Yes, technology and AI or what I call the “IQ” of Wealth Management can help in certain aspects of wealth management, but the deeper need to connect emotionally and personally, the empathy or “EQ” of a Wealth Manager to such client situations is distinctly human.

We often hear clients repeatedly sharing in their feedback surveys to wealth management firms that they seek “holistic advice” from their providers. I interpret this as firms needing to get the IQ and EQ balance right in the solutions that they provide.

AI will be a key driver in supporting complex investment decisions and ensuring greater transparency, but this will soon become the lowest common denominator and AI will not differentiate one firm from the other. Rather, it will be the trust and intellectual heft of wealth managers in a firm, to be able to find collaborative solutions for complex problems that will drive market share in this business. Equally, wealth managers will have to help their clients prioritise financial EQ to foster a more positive attitude in their clients towards their financial assets.

All this means that wealth managers will have to reskill themselves. They will have to offer more than what is simply available at the swipe of a client’s touch screen smartphone.

(The writer is founder, Managing Director & CEO, Waterfield Advisors)
First Published on Oct 9, 2019 08:43 am