The convenience associated with online channels appears to be increasingly appreciated by wealthy clients too. Are relationship managers then even necessary?
Much can be read and heard about the digitalization of the world of banking: there is currently a vision circulating according to which wealth management will be controlled by robo-advisors and online providers. Banks and relationship managers have no place in this world. But how do private investors feel about this? Do they really want to receive advice from a robot?
«The trend is in fact moving in the direction of increased digital access,» says Julia Scheyer (pictured below), responsible for supporting and implementing market research projects at LGT. The results of the LGT Private Banking Report show that the desire to interact with a bank online from the convenience of people’s homes is rising significantly.
Using Mobile Phones on the Go
The desire to communicate with one’s bank and relationship manager while on the go using mobile phones or tablets is also growing. At the same time, the decline in the share of those who want to place orders directly with their relationship managers is also statistically significant.
And growing demand for online access to place banking orders and query safekeeping account information is not only coming from young (in the survey < 49 years old), male respondents. Older (in the survey > 60 years old) and female private investors are increasingly convinced of the advantages of online channels. The convenience associated with online channels, or in other words, the ease of placing orders, appears to be increasingly appreciated by private banking clients, irrespective of their age or gender, and should be taken into account by banks when developing online solutions.
Digital Deniers Disappearing
The growing group of private investors who appreciate online access stands in contrast to the only 9 percent of respondents who use no form of online or mobile banking whatsoever – the so-called digital deniers. Since 2016, this share of respondents has further decreased by 5 percent. If this trend continues to the same degree, there will likely be no digital deniers remaining by 2022.
«There are therefore many indications that in the future, interaction between clients and banks will increasingly take place online,» Scheyer says. Are relationship managers then even necessary?
Need to Meet
The survey respondents say they are. Because when the matter at hand is not just order processing, but investment advice, clients prefer to consult a relationship manager and not a robo-advisor who offers a fully automated online solution to determine the allocation of securities portfolios and the regular adjustment thereof.
For a large majority of high-net-worth investors, the opinion of a relationship manager continues to be more valuable than a recommendation from a robo-advisor. When it comes to important investment decisions, they want to meet their relationship manager in person. More than half of respondents indicate they would never have their assets managed by a robo- advisor.
Address this Trend
And only a minority believes that a robo-advisor is better able to process information than a relationship manager. However, clients are not necessarily ready to dig deeper into their pockets and pay a premium for personal advice in the future.
«It is clear that digitalization is also an extremely important topic in the banking sector,» Scheyer says. The banks must continue to proactively address this trend and offer their clients user-friendly and innovative online services. Private banks in particular, however, probably need not worry that they will soon be replaced by robo-advisors.
Humans or Machines?
Because the findings of the report show that in a comparison between humans and machines, humans still prevail when it comes to wealth management. The vision of a robot-dominated world of banking does not currently appear to be a model that the respondents of the LGT Private Banking Report find particularly convincing.
The LGT Private Banking Report 2018 was published in June. The complete LGT Private Banking Report 2018 and additional information can be found here – only in German. The study has been conducted every two years on behalf of LGT since 2010. The objective of the report is to gain important insights into the investment behavior and attitudes of private banking clients. Around 360 high-net-worth private individuals from Germany, Austria and Switzerland with investable assets of over $900,000 are surveyed to this end. The author of this study is Prof. Teodoro D. Cocca of the University of Linz in Austria.
Julia Scheyer studied Strategic Management at Leopold Franzens University in Innsbruck, Austria. Following a stay abroad in London, she graduated from LGT’s Graduate Program in the Marketing and Communication department, where she is now responsible for supporting and implementing market research projects.
