Investors are more willing than wealth managers think to share personal data, providing advisors an opportunity to deliver tailored experiences, according to an EY study.
But firms need to have a strong data strategy to make the most of this opportunity, the consulting company notes.
The majority of millennials (78%) and Generation Xers (69%) surveyed by EY are more willing to share personal data with their primary wealth manager compared with other institutions, including health care providers, banks and insurers, according to findings published in April.
Baby boomers are as willing to share personal data with wealth managers as they are with health care providers, but not with other institutions, the findings show.
In exchange for providing personal data, investors want to receive more relevant services and experiences in return, EY says in its 2021 Global Wealth Research Report.
“That places wealth managers in a far stronger position of trust than banks, insurers, retailers, technology firms and media platforms,” EY says. (See related: Let's Get Personal: Tips for Creating a 'One-of-a-Kind' Client Experience (at Scale).
EY, which commissioned research firm Savanta to conduct the survey during October and November last year, collected 2,500 responses.
EY’s report identifies the three age groups: millennials — 21 to 40 years old; Gen Xers — 40 to 65 years old; and baby boomers — older than 65 years.
The firm did not disclose the number of responses it collected from each age group.
The results also show that the Covid-19 pandemic has led wealth management clients to increase their use of digital technology.
Around 51% of the survey respondents globally plan to make even greater use of digital tools in the future — and the figure is higher among millennials (78%).
In North America, 41% of the survey respondents plan to engage more with their advisor virtually moving forward.
EY believes digital adoption is increasing self-service, empowering client decision-making and reducing the cost to serve.
But companies bogged down in legacy systems can miss out, EY says.
With clients’ growing openness to sharing data, EY suggests wealth firms must do more to extract value from the data they already have.
Providers can harness data released in the form of documents, downloads, logins, messages and meeting requests, according to EY.
“A clear data and analytics strategy will help firms to gather and label this fast-growing data set, clean and structure it in a single ‘golden source’ and interrogate and analyze it,” EY says.
Leading providers can then use artificial intelligence and machine learning to optimize the applicability and value of their client data, EY says.
Firms seeking inspiration could look to their counterparts in technology and online retail, which are industries that thrive on customer data and are innovating at a staggering pace, EY says. The use of neuroeconomics can also help to develop richer client insights, it adds.
In the long term, clients will only be willing to share their data if they believe the process is creating value, according to EY.
“Firms should overtly demonstrate the links between sharing of certain data, identifying more tailored services, and the resulting positive outcomes,” EY says.
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