With the advent of modern technology in the financial services industry, the roles of wealth advisors are evolving. The majority of the wealth management firms and advisors are moving towards digital wealth management and now employ digital tools such as Robo-advisors to manage the assets of clients, which not only brings efficiency in the roles of wealth managers but also provides excellent digital services to customers. The technology uses machine learning and artificial intelligence algorithms to automatically advise the clients’ assets, limiting human intervention in the process. While digital wealth management automates the majority of the tasks, wealth managers focus on extending and improving business relationships with clients.

Digital wealth management gained prominence after the financial crisis of 2008 because of the growing demand for software to manage the assets in a better way. Total assets under management in the global Robo-advisor market reached $987 billion in 2020, which is expected to grow annually by 26% till 2024.

Why should firms move towards digital wealth management?

In this section we will discuss main reasons why firms should adopt digital wealth management instead of following the traditional service delivery.

1- Price & risk-sensitive customers:

Following the financial crisis of 2008, wealth of the customers quickly eroded, which has prompted them to invest in less risky assets at low cost. Instead of paying high management fees to the wealth management firms, customers prefer investing in low-risk, low-cost index tracking funds and ETFs. So, to attract customer attention, wealth management firms should reduce the management fees, which is only possible with the introduction of a digital wealth management software that will lower the cost of managing clients’ assets, allowing firms to charge lower management fees.

Investing in a digital wealth management system will also help firms to manage the clients’ assets in accordance with the risk tolerance of the customer. Assets of a client with low risk appetite will be invested in low-risk avenues and vice-versa, providing clients with the required risk-return pay-off.

2- Increased competition:

With the growing competition among the wealth management firms, there is a growing need for differentiation of wealth management services as investors today have a range of choices. Firms who offer excellent customer services and have a customer-centric approach in their processes will have high customer satisfaction levels and develop a high customer base. Digital wealth management helps firms achieve high customer satisfaction levels by bringing efficiency in their processes and empowering customers with many options regarding wealth management.

3- Increased regulatory requirements:

Due to the increased regulatory requirements, source of funds, transparency in management fees, and other financial and risk management regulations require wealth management firms to invest in a robust digital wealth management system to comply with the regulatory requirements in an automated and cost-effective way. Trying to comply with the regulatory requirement in a traditional way not only proves costly but is inefficient as well. The digital platforms will ensure that the regulatory requirements are complied with and all the tasks are completed within the regulatory requirements while keeping the documentation in digital form which is freely and readily accessible.

Models of Digital Wealth Management:

Digital wealth management services can be categorized into three types based on the level of automation and human involvement in service delivery.

1- Automated wealth management:

2- Hybrid wealth management:

3- Technology-aided personalized wealth management:

Let’s discuss each model of digital wealth management below:

1- Automated wealth management:

Automated wealth management, as the name suggests, is designed to fully perform all the tasks from client onboarding and asset management to customer service management. Although, there are varying degrees to which the tasks could be automated, many firms are trying to automate as many processes as possible to increase efficiency and attain competitive advantage by differentiating their services and reducing costs. Firms that fall in the automated wealth management model have attained the highest level of automation possible. Wealth management firms with simple clients demands can easily attain automated wealth management because designing an automatic platform for meeting simple asset management demands of clients is easy.

2- Hybrid wealth management:

This model of wealth management employs the services of a human wealth advisor as well as the automated Robo-advisor to manage clients’ assets. Usually, a wealth advisor handles client relationship management and oversees firm-specific tasks, whereas the Robo-advisor empowers the client to make informed decisions on their assets. Robo-advisors can take into account risks and goals and use artificial intelligence, machine learning algorithms, and other technological features. Depending on the requirements of the wealth management firm, roles and responsibilities can be divided between the Robo-advisor and human wealth advisor as each wealth management firm has its own processes.

3- Technology-aided personalized wealth management:

This model of digital wealth management suits those wealth management firms that have high net worth clients — individuals as well as business customers — having complex asset management needs. To deliver their services in a better way and meet the customized requirements of high net worth clients, wealth management firms provide technology-aided personalized wealth management services. Wealth management firms allocate personalized wealth managers to each client who, personally, oversees the assets of each client and automates some part of the wealth management process, while giving the client personalized dashboard as well. Some organizations give exclusive benefits to high net worth clients and give customized services to them.

Advantages of digital wealth management:

Apart from automation, digital wealth management offers many advantages to wealth management firms, which we will discuss below:

1- Client Accessibility:

Digital wealth management gives increased accessibility to clients to view and perform any activity in their account using their smartphone, laptop, or computer. Clients can gather information about asset performance 24/7 in just a few clicks using the online dashboard over the internet. This eliminates the need of customer support staff and helps reduce the cost of maintaining the customer support staff 24/7 while increasing client satisfaction. With the help of digital wealth management, firms can create chatbots as well that generate automated responses to clients’ queries, resolving common queries of existing and prospective clients.

2- Easy customer onboarding:

With digital wealth management, onboarding new customers becomes extremely easy as account opening and other customer acquisition processes can be made paperless, allowing for a seamless and hassle-free account opening process.

3- Customer management:

Wealth managers even at small firms can manage a large number of customers with the help of digital wealth management, thanks to the ability of a CRM, document storage system and Robo-advisors to help the clients have a sense of empowerment and in the moment transparency. Records of the customers are available digitally and available readily with a few clicks, allowing for better customer management. Wealth managers can track an entire history of a client making it easier to pursue a more holistic financial approach.


To keep ahead of the competition in the wealth management industry, your firm must invest in a digital wealth management platform that can help you grow, scale and market. This is especially true in this age where most people under 40 grew up with computers and are used to a level of control and visibility. Among the range of financial advisor software available in the market, your firm must select the best one that has all the features and capabilities that will give you a competitive advantage. There are several big players in the field like AdvisorEngine that make innovative software that can easily get up and running with integrations to the most popular custodians.

Author's Bio: 

I am Malik Nauman, a reputed guest blogger, who has been in this profession for about 6 years now. I have been sharing my opinions and contributing to varied websites.