Wealth Management’s Missed Opportunity in 2020: Mobile Apps

Clients are using the apps more than ever but “satisfaction lags” compared to other industries, according to J.D. Power.

(Illustration by RIA Intel)

(Illustration by RIA Intel)

With the Covid-19 pandemic forcing many financial advisors to work from home, the wealth management industry and its clientele have hastened their adoption of technology.

That didn’t just mean replacing in-person meetings with video conferences. Investors have adjusted, too, and changed the way they interact with their wealth managers. A recent study by J.D. Power, the data analytics and consumer research company, found that 36% of investors working with a financial advisor are using their wealth managers’ mobile app more frequently during the pandemic.

The trend was especially prevalent among younger investors. Forty-five percent of millennials (those born between 1981 and 1996) and 30% of Gen X (those born between 1965 and 1980) investors said they used their wealth managers’ app more.

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But no wealth manager’s mobile app has significantly differentiated itself from competitors and their phone portals are collectively poor, at least compared to other industries.

“Wealth management mobile apps have emerged as a go-to resource for investors during the COVID-19 pandemic, but despite substantial growth in app utilization, customer satisfaction lags other industries and firms have failed to leverage the potential of these digital tools to drive greater interaction with advisors,” the J.D. Power report said.

The average satisfaction ratings for the mobile apps of retail banks, credit card companies, and insurance companies were all higher than those for wealth management. “Few wealth management apps provide the level of advisor interaction customers are seeking,” according to J.D. Power.

Chase had the highest-rated app amongst wealth managers, followed by Wells Fargo, E*Trade, U.S. Bank, Charles Schwab, Fidelity, Bank of America’s Merrill, and others.

To be fair, the difference between the satisfaction scores of wealth management apps and other industries is small. On a 1,000-point scale, the overall satisfaction score for wealth apps was 849 — a rating barely below banking (852), insurance (864), and credit card (865) companies. Nonetheless, the ratings signal that wealth managers’ apps lagged others during a critical period when usage soared.

“Most wealth app offerings are missing the mark. It’s notable that more than one-third of investors who work with an advisor say they’ve increased their wealth app usage during the pandemic, which is more than double the rate among investors in the do-it-yourself segment. Advisors and their firms need to recognize that the mobile app is not a threat to the advisor’s value — it is an opportunity to increase engagement by meeting investors where they are,” Michael Foy, senior director of wealth & lending intelligence at J.D. Power, said in a statement about the 2020 study.

Remote work has been a success for wealth managers but they plan to return to the office as many as four days per week, perhaps to bridge a gap in client relationships.

In May and June, as the novel coronavirus spread across the U.S., 31% of investors said they had no recent advisor contact. Out of those who did communicate with an advisor, only 2% said they did so using a mobile app or secure messaging. Advisor contact using an app is low industry-wide despite both being frequently requested features by users, according to J.D. Power.

Out of the 14 apps considered by J.D. Power, 35% offered chat functionality and just 41% supported secure messaging.

U.S. wealth managers reluctant to add those features and others, or create a mobile app at all, should think again. Europe’s wealth managers have also come to a realization that should serve as a forewarning to peers in the U.S. and elsewhere: “As the pandemic lingers on, what started as tactical, piecemeal, short-term changes are looking like business as usual in the ‘new normal.’ The hybrid wealth management model is here to stay.”

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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