How can wealth firms bridge the digital engagement gap?

For many wealth firms, capturing the millennial demographic is a key piece of any effort at future-proofing. Among many other things, that means working to meet their expectations as digital natives, while still addressing their needs as human users and clients.

“There are different drivers in what they're interested in, and generally, their values are fundamentally different from what you’ve seen perhaps in previous generations,” said Yaela Shamberg, Co-Founder and Chief Product Officer of InvestCloud, a leading cloud-native wealth platform provider.

While the traditional wealth advisor’s clientele may seek personal relationships from phone calls and in-person meetings, Shamberg says the younger demographic of wealth clients desire the ability to interact with their advisor, their wealth, and technology to a degree that hasn’t been seen before. Having grown up with the internet and mobile technology at their fingertips, they’ve grown accustomed to a certain level of access, control, transparency, and on-demand service.

That’s not to say they want purely transactional solutions. To a large extent, Shamberg says, millennials are similar to previous generations in that they’re very much interested in conversations about real wealth as they envision it, and a personal relationship with a professional they can trust.

“I think there’s still very much a calling for relationships with a wealth advisor, but enhanced and enriched with digital technology,” Shamberg says. “That includes client communication, client management, automation, providing client portals, and mobility solutions … those should be used to strengthen the human relationship, to add a level of transparency and access that goes beyond just calling your advisor whenever you want to.”

While younger generations have learned to have high expectations from technology as consumers, Shamberg argues the wealth space has fallen behind when it comes to investment in personalized and hyper-modular solutions. Many firms, she says, have traditionally been held back by a perceived tension between achieving personalization and scaling it up to serve a large clientele.

“Wealth firms have been taking on the challenge, but with paper reports, PDFs, and Powerpoints,” she says. “And you can only do so much of that before you can’t take on any more business without taking on more people. But now people expect that digitally, because that’s what you get in other areas of your life.”

Another area of adoption where wealth managers could be falling behind, she says, is behavioural science. In particular, she believes there’s a huge opportunity for firms to use principles and frameworks of gamification to engage clients and guide them towards better behaviours and decisions.

In its conversations with wealth firms, InvestCloud often delves into gamification through the use of different principles and trademarked frameworks that it owns. One framework, called CHAPOSS, applies game theory in digital engagement to help bring people back to look at their information, and understand the process to consume information. Another framework, CHAAPIF, focuses on decision theory to provide people with the right framework to make decisions that are right for themselves, without making the mistake of putting too much weight on the result.

“When we talk about decision theory, there’s a lot of science behind it,” Shamberg says. “For example, we know that men are generally overconfident in making financial decisions, and women are underconfident. There’s also herding mentality, where some people may rush to do something if they think others are doing it too. We also consider the possibility of information overload, where the user gets so much information thrown at them that they end up paralyzed.”

Another facet of gamification that InvestCloud considers is the use of status accumulation. For certain clients, the ability to earn points based on the number of interactions with their advisor, the amount of dialogue they have, or how often they attend educational events could incentivize ideal behaviours. For others, the recognition could be attached to interacting with educational material and completing certain tasks that go beyond celebrating trades in their investment account, which is a feature that the U.S.-based brokerage platform Robinhood was accused of misusing in the months following the GameStop saga last year.

“We also have a foundational focus on principles of good design for our user interfaces,” Shamberg adds. “Traditionally, we might think of design purely in terms of aesthetics, like fonts or colours. But when we look at it, we think about how it works, and whether its different elements work together to support its intended function.”

While many applications of gamification today may come off as too simple to be effective, Shamberg emphasizes that it can improve outcomes dramatically if leveraged in the right way. Among other considerations, she says firms looking to incorporate it as a strategic objective should look at it through the lens of serving clients, making things intuitive, and creating experiences that are meaningful to clients while giving them just the right amount of choice and freedom.

“We have a lot of dialogue with our clients to say ‘Let's have a very flexible, multi-persona system,’” Shamberg says. “Not all your clients are the same, so don't try making them the same … make sure you’re giving them what they need.”