- Whitman - http://whitman.com.my -

Imagining an online wealth manager that really works

Why a hybrid advisory model is the way forward

My article in February, “Whither Robo-advisors as Wealth Managers” raised the question whether robo-advisors, spawned by advancements in financial technology, can truly take over and transform the wealth management industry; and if so, to what extent? I also hinted about the possibility of something even better that can surpass both traditional and digital wealth management.

When robo-advisors first made their entrance into the wealth management industry, they immediately became rock stars in the eyes of the media and analysts alike, promising revolutionary changes in terms of accessibility, low costs of entry, convenience and affordability. But does being a consumer- friendly investment tool mean that robo-advisors are the best drivers to help you grow money? My previous article, while acknowledging some merits of robo-advisors, highlighted the limitations as well. These include the absence of a human touch and emotional connection, the inability to provide a holistic perspective due to the single-minded approach in covering investments only and the limited capacity for managing assets.

Now what if the benefits of internet technology offered by robo-advisors could be combined with a living and breathing human advisor? If a merger of the best of both worlds could be realised, think of the potential it would bring to the wealth management industry.

 

Square pegs in round holes

Do you feel that in spite of the many available options of wealth management services out there in the market currently, none of them seem to fit the criteria of what you are looking for? Perhaps you share the sentiment of many Malaysian working professionals who feel you are indirectly being forced to choose between internet-based investment tools or traditional full-service providers which are on opposing ends of the spectrum and neither of which alone seems to be able to fully meet your wealth management needs because:

 

It is clear that both technology based and traditional wealth management services each have their pros and cons. While many may balk at the idea of gene manipulation to obtain designer babies whereby defects are discarded and the desirable traits maintained, perhaps we could stretch our imagination and apply such a theory to create the “perfect” wealth manager.

 

A Wealth Manager at your fingertips

Imagine if you could have a competent wealth manager literally in the palm of your hands inside your mobile phone, one that is accessible anytime and anywhere. One that is neither a robo-advisor, which can only provide a partial solution to your overall wealth management goals, nor is it a person who has fixed working hours and off days. It is a hybrid advisory model that offers the perfect blend of technology and personal touch. So, what can be expected of this wealth manager service?

(A) It can help you build your roadmap to financial freedom

If you are a working professional who has clocked in considerable years of hard work to build a safety net of savings for yourself, chances are one thought that regularly plays on in your mind is when will you be able to achieve financial freedom? How long will it be before you can finally leave your worries behind and start enjoying life and reaping the fruits of your labour?

The journey to financial freedom is very personal and varies from individual to individual. It could range from retiring at a specific age, owning certain number of unencumbered assets or having the financial means to pursue one’s lifelong dreams of leisure and travel.  Regardless what your idea of financial freedom may be, it should always start with a roadmap that is able to:

(i) Tell you where you stand based on your current assets and liabilities;

(ii) Pinpoint where you are in terms of achieving your goals to financial freedom; and

(iii) Tell you what you should do starting right now in order to reach your final destination of financial freedom within a prescribed timeframe.

In addition, whenever you are required to make an investment decision, the wealth manager can provide you with the necessary guidance, irrespective wherever you may be. You no longer need to wait for your pre-scheduled appointment in order to get some feedback from your wealth manager because as we know, many financial decisions are time sensitive and require immediate decisions or you might risk missing the opportunity.

(B) It should be a holistic wealth manager

Just like a premium wealth management service provider, this wealth manager should dispense advice which is complete and comprehensive, covering the 8 key areas of holistic wealth management i.e. Investment Planning and Management, Risk Management and Insurance, Children’s Tertiary Education Planning, Retirement Planning, Asset Protection, Estate Planning, Debt and Loan Management and Tax Planning. The wealth manager should also be able to provide a full range of investment options across all asset classes so that clients are able to select the ones that best suit their needs.

In addition, this wealth manager should provide advice that is fully integrated based on the client’s unique personal financial situation. There should not be any “standard” advice or broadly categorised recommendations merely on the basis of the client’s general demographic profile which are typical characteristics of online investment tools. The advice should aim to be qualitative as well as quantitative and measurable by total net worth growth rather than based on the performance of one single investment product.

 

 

(C) It has all the benefits of an internet-based investment tool

This online wealth management service should provide all the benefits of an internet investment solution as there is no denying that this is the way forward.

Never again will investors need to search for their hard copy financial reports and statements stored at the back of their storerooms to get guidance for investment decision making or find out how their money is growing. All this, would be replaced with an online wealth management service which offers real-time accessibility 24 hours a day, 7 days a week, and allows users to manage and keep track of their big picture personal finances at the touch of a screen

As this service is online, it is democratising in nature as one only needs to have a mobile device and access to the internet which basically covers the majority of the urban population irrespective of location. There will not be any client screening process or minimum prerequisites for eligibility thereby opening up doors for more people to enjoy this service.

Finally, lower entry costs and fees makes this service more affordable to the masses, marking an end to the perception that wealth management services are solely reserved for the upper middle class and well-to-do segment of the population.

 

Having the best of both worlds

Thus, a real online wealth manager should be a combination of the best of both worlds by offering premium customised service together with the benefits of internet technology. By now I hope you share my vision that the most ideal wealth management solution is one where a human advisor delivers certain processes that are complex and emotional while those that involve heavy calculation and require seamless accessibility be performed by a machine.

Will we see the introduction of such an online wealth manager on Malaysian shores anytime soon or is it mere wishful thinking? Even if it is not a 100% perfect embodiment of the ideal, a near enough version in the right direction would be equally capable of ‘disrupting’ the wealth management industry which is currently calling out for more innovative solutions to clients’ needs. This could be the answer we have been waiting for; one capable of revolutionising the client experience and elevating the entire wealth management industry to the next level. If you are among many who have been patiently looking out for the right wealth management service for you, rest assured – good things come to those who wait.

Imagining an online wealth manager that really works. [1]
Why a hybrid advisory model is the way forward