Wealth and investment management firms want to leverage digital technologies to improve customer experience (CX) across touchpoints and raise the productivity of their advisors. A digitized financial advisor enables advisors to focus on value-added, rather than administrative, tasks. Those seeking broader digital front ends with complementary capabilities, such as a single view on the customer, analytics, and end-to-end functionality and features, should understand the landscape of digital wealth management platforms. We define a digital wealth management platform (DWMP) as:

A platform that offers digital solutions to optimize the client experience and increase financial advisor productivity across the entire investor lifecycle.

Three Reasons Why Firms Invest In Digital Wealth Management Platforms

There are several reasons why firms invest in digital wealth management platforms. They invest in off-the-shelf digital wealth management platforms to:

  • Leverage automation to maintain profits. As trading and investment management fees go to zero and firms grapple with decreasing margins, they need to digitize operations and find efficiencies elsewhere.[i] DWMPs can automate notoriously inefficient processes such as customer onboarding. Some platforms offer AI components such as machine learning, natural language processing, and digital process automation to reduce exceptions, making the onboarding process paperless and frictionless.
  • Elevate the investor experience with next-gen capabilities. Forward-looking platforms are adopting modular architectures to integrate innovative capabilities into their core offering. Aggregating accounts makes financial plans more dynamic — an important capability with platforms organizing more around customer outcomes than a suite of financial products. DWMPs are offering better financial planning capabilities in response to free financial planning tools now available in the market.
  • Make financial advisors more productive and effective. Regulatory scrutiny and competitive pressures mean that firms are looking for how they can enable advisors to deliver compliant advice to more customers while maintaining a personal, engaging relationship. A range of technologies such as digital decisioning, APIs, and intelligent agents are promising to deliver this.[ii] Advanced DWMPs augment financial advisors by enabling document sharing and collaboration, advanced scenario planning and visualization, and “next-best-action” capabilities to drive better insights and dialogue with clients.

The Digital Wealth Management Platform Market Breaks Out Into Two Functionality Segments

Based on my recent research of these platforms, the digital wealth management platform market breaks out into two distinct segments:

  • Financial services specialists offer wealth management and core banking integration. These firms target the needs of large “one-stop-shop” financial services firms that offer wealth management services alongside an array of banking and insurance products. These vendors emphasize how their core systems are integrated to provide a single view of their financial picture. These vendors originated as core banking platforms and have evolved through acquisitions and partnerships to add DWMPs to their portfolio, bringing an integrated suite of enterprise software to the marketplace.
  • Wealth management specialists bring focused offerings based on geographic market. These providers directly target the wealth and investment management market, broadly offering next-gen capabilities such as automated client onboarding, goal-based financial planning, document sharing, and real-time collaboration. Capabilities such as retirement drawdown strategies and complex tax planning are other areas of differentiation. Rather than focusing on a “one-size-fits-all” solution, their solutions tend to serve smaller, more focused geographic footprints tailored to the market they go after.

Read more on this topic in my most recent report, “Now Tech: Digital Wealth Management Platforms, Q4 2019,” which is Forrester’s overview of 24 digital wealth management platform providers.

[i] See the Forrester report, “The Race To Zero Fees In Investment Management.”

[ii] See the Forrester report, “Accelerate Financial Advisor Productivity With These Technology Building Blocks.”