What is Digital Wealth Management?

An investment strategy is called “digital wealth management”. It makes use of technological resources to provide a variety of savings and investment options to investors. For example, savings plans that invest in stocks, exchange-traded funds (ETFs), or digital assets, as well as DIY platforms that let investors create their own allocations and custom portfolios. The utilization of technology to provide clients with solutions that assist them in managing and accumulating wealth is crucial.

Read: How to Market Wealth Management Services?

Read: What is the Difference Between Asset Management and Wealth Management?

Digital wealth management isn’t just what robo advisors do, it also refers to the numerous digital technologies that financial advisors can employ to produce consistent user experiences across all of their user devices and platforms.

For advisers to offer their clients the finest services possible, digital wealth management uses financial technology, big data, artificial intelligence, and risk management. Advisors can improve their performance with the financial assets they manage by using the technologies to foster greater engagement and transparency, foster greater collaboration, and raise their involvement.

The democratization of the financial industry is aided by digital technology, which also has a significant positive impact on advisers’ businesses. On their terms, it enables advisors to interact with a younger generation. Additionally, it enables advisors to scan client portfolios using machine learning to suggest potential modifications that could be made to help clients achieve set goals. Additionally, it enables advisors to incorporate data from third parties into their information to give their clients more information about their assets. The ability to swiftly check on the status of accounts is another benefit that these technologies can offer to both advisors and customers.

Financial advisors that use digital wealth management have access to the digital resources they need to build seamless client experiences across all platforms and devices, enabling them to extend their business solutions to serve more clients. In the digital age, customers demand financial advisers to swiftly catch up on their requirements, aspirations, and ambitions to deliver individualized financial advice. The high-touch consultancy has always been a crucial component of the advisor relationship. The financial services sector has gone digital, enabling businesses to communicate data-driven insights to advisors that promote interaction and solidify bonds. 

Digital Wealth Management Platforms Provide Services Including:

  • Portfolio selection
  • Asset allocation
  • Banking and account aggregation, and
  • Online risk assessments.

Need for Digital Wealth Management

An employee who participates in a defined-benefit plan, receives a certain sum of money upon retirement, either in the form of an annuity or a lump sum. A defined-benefit plan is significant because it is sponsored by the employer, who is also in charge of managing the assets and taking any investment risks. 

  • This plan gives companies a specified formula to use when determining the number of pension payments an employee can anticipate receiving upon retirement.
  •  The calculation takes into account both the duration of work and income history. The employee was responsible for the defined-contribution plan, as opposed to the employer-sponsored defined-benefit plan. 
  • Additionally, the employee does not anticipate receiving a predetermined, fixed pension amount at retirement; instead, what he or she receives is based on how much they have contributed and how well their selected investment plan has performed. 
  • Defined-contribution retirement plans replaced defined-benefit retirement plans as the standard retirement vehicle throughout time.
  • Since the employers previously handled everything, one of the significant effects of this transformation was that employees who had no prior experience with investments or investment management suddenly had to make the appropriate investment decisions. Personalized wealth management services became increasingly necessary as a result. 
  • Today, in the future: The average worker now needs to be adequately educated to make the right financial decisions, which will unavoidably have a significant impact on when he or she retires, not just the wealthy. Simply said, money management is now widely accepted and needed. 

Development of Digital Wealth Management

Most defined-contribution plans started off investing in mutual funds. Wealth advisors were tasked with assisting employees in selecting the ideal mutual fund combination to increase their retirement nest. 

A mutual fund is a collection of money from several retail investors that is invested in securities such as stocks, bonds, fixed-income instruments, and more (equity mutual funds, bond mutual funds, income mutual funds, etc.) under the guidance of professional money managers.

A mutual fund investor invests some of his money in equities (equity mutual funds) for their high returns, bonds (bonds mutual funds) for their low risk and fixed-income securities (income mutual funds) for dependable income.

Importance of Digital Wealth Management

Digital Wealth Management companies must overcome several obstacles before deciding to undergo digital transformation, since consumer expectations are changing, there are more obstacles on the horizon, and new technologies are having an impact on those needs.

The demand for greater digitalization has grown among our clients, primarily private banks and wealth managers.

To be future-proof across the front, middle, and back offices, every business model now requires transformation.

Additionally, they anticipate that a significant portion of financial data will be transferred to the cloud in the upcoming years and that blockchain-based solutions will be crucial for the development of the Digital Wealth Management sector.

Techniques for Expanding and Staying Competitive 

Due to the COVID-19 pandemic’s increased volatility and unpredictability, wealth managers must offer more digitally accessible, quicker, and easier services. Listed below are a few tactics that must be implemented if businesses are to expand and remain competitive-

Customer-Focussed Approach: When developing wealth management methods, the client will be a major factor. The customer journey comprises the difficulties they encounter and the long-term solutions they want, which help to enhance the user experience at each touch point. Advisors can be given more insight into their clients’ saving and investing habits by using advanced analytics, AI, and machine learning tools. As a result, the Digital Wealth Management sector is in the midst of a revolution, and accessibility, technology, and customer-centricity are the main focuses of upcoming strategies.

  • Automate to create value: 

To boost business operations and increase profitability by making them more effective and safe, advanced analytics, empowered with AI, ML, and Blockchain, have developed numerous automation solutions. This reduces the danger of financial loss.

1- Adopting a hybrid channel

This strategy combines the ideal option that provides both online and conventional face-to-face services. The hybrid strategy was crucial for surviving when the pandemic disrupted the conventional strategy of encouraging face-to-face interactions.

2- Digital Transformation Pioneers

Early adopters, who take pride themselves in being the first to utilize technology in wealth management, are unlikely to persist if their online experiences continue to be troubled. In the future, they are expected to engage with each other mostly through digital means. Wealth management companies must therefore earn their trust.

Digitization of Wealth Management Through the Use of Technology.

Wealth management businesses have been hesitant to adopt technology, despite obvious trends in other industries, and despite a considerable rise in worldwide technology spending. Here are some of the most recent innovations in wealth management technology-

  • Blockchain: Companies can segregate their internal blockchain systems from their external blockchain systems using blockchain technology to maintain privacy and transparency. Smart contracts, cost savings, security, and privacy protection are just a few of the advantages it offers.
  • AI and Machine Learning in Wealth Management: Interactive dashboards built with AI are used to deliver these findings. For better decision-making, ML may also generate financial reports automatically.
  • Cloud Computing:  Cloud storage solutions help wealth management companies save money by replacing their expensive investments in data storage hardware with increased security and secrecy of data protection. Additionally, it gives wealth management companies subscription choices so they may select the best SaaS based on their particular company requirements.

Advantages of Digital Wealth Management

Digital wealth management platforms are a tool that fintech organizations may utilize to access the most up-to-date integrated technologies and data-driven analytics that will enable their advisors to provide intelligent advice. They aid advisors in developing a deeper understanding of the requirements of their clients and in making suggestions for the proper portfolio allocation. The advantages of digitalization in wealth management for the company are listed below-

  • Converted Paper to Digital: Using cutting-edge digitalization techniques, digitization assists with procedures like account onboarding and the conversion of paper documents to digital form. Through the elimination of reprocessing and delays, as well as the reduction of processing times for front-to-back offices, back offices, and end investors, we can save money.
  • Security and Communication: As businesses navigate the pandemic, the wealth management sector’s digital transformation must concentrate on elements like secure channels for managing conversations and secure video communication, so clients can have a better virtual advisory platform for any such events that will demand privacy and security. Wealth management companies have replaced their client-reporting automation systems.
  • Digitally enhanced financial advisors, chatbots, and robots: The demand to adapt to the changing aspects of the world is great for wealth management companies. Using online chat to communicate with businesses is the main way that modern investors obtain wealth management services. Several wealth management use cases and activities can be impacted by tools like chatbots, which are powered by AI and capable ML algorithms.
  • Working with Internal and External Stakeholders: Due to the present pandemic, there are fewer opportunities for face-to-face interactions between customers and advisers. Through video conferences and virtual conference rooms for collective mind mapping, investment reviews and new mandates need to be promoted. Through the relevant portal, giving the client the appropriate content and visuals about their portfolio, asset allocation, and investment evaluations presents a special chance to cooperate digitally on the advisor-client relationship.


Despite having deposits worth trillions of dollars, financial institutions are losing money to digital-first investment platforms because they lack a dedicated enterprise-level digital wealth platform. Community banks are under intense pressure to keep deposits, boost fee-based income, and reduce deposit outflows to investment solutions that constantly try to upsell banking services to these new clients. However, by utilizing the key techniques listed below, banks can put investment services into place on their own, which could have a dramatic impact on customer engagement and their bottom line.

Additionally, the use of investment platforms by customers who are digital natives is made possible by the digital approach to financial services. The reach of a financial institution can be expanded beyond the conventional branch model and hours of operation by investing in digital tools and platforms. In the evenings and on weekends, when their branch personnel is often not accessible to assist, our banking clients say that roughly 25% of their digital wealth traffic happens.

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