As clients and advisers get younger, firms feel pressure to up their tech game

In this age when everything is digital, just keeping up is no longer good enough.

According to a new report from SS&C Technologies, the younger generation of investors and financial advisers might be driving the demand for innovation in financial services, but adoption rates are increasing among both young and old.

The report on digital engagement across financial services, which was based on survey responses from nearly 600 financial advisers, includes an outline of what it will take to capture the attention of the next generation of clients.

The basic message is that technology should be easy to use and as transparent as possible, especially when it comes to fees.

To drive home the importance of constantly pushing toward the next stage of innovation, the report points out that customer loyalty can be shattered with a single technology glitch.

The research findings show 57% of millennials would be willing to endure the hassle of switching banks for a better tech platform.

“A growing number of today’s advisers are digital natives and they are raising the bar for online digital experiences,” said Lee Kowarski, head of data science and distribution solutions at SS&C.

“Asset managers have an opportunity to get ahead of the competition by improving digital engagement,” Mr. Kowarski said.

The report ranked Fidelity Investments as the leading asset management firm in terms of digital engagement, which means it has been able to check all the right boxes when it comes to working with next generation advisers and investors.

“The next generation of advisers expect engaging, intuitive and personalized online experiences across both their professional and personal lives,” said Jon Davies, senior vice president of digital marketing at Fidelity.

“Advisers are increasingly expecting personalized experiences; they’re expecting businesses to remember them and understand them across all channels of engagement, which is why we’re so focused on delivering seamless and consistent client experiences,” he said. “For example, on our website, we strive to provide a frictionless experience through a responsive design fueled by relevant content strategies.”

Franklin Templeton ranked second behind Fidelity among the leaders in digital engagement.

“As with all consumers, adviser and investor expectations of a firm’s digital experience is rising, and asset managers need to keep pace with those expectations,” said David McSpadden, senior vice president in global client marketing at Franklin Templeton.

In terms of drivers, Mr. McSpadden said, “Voice and further personalization are two trends we view as driving innovation.”

“Leveraging client data to create more customized experiences that better meet investor needs and allowing clients to interact with our content via voice, as well as via screen, will be important for future success,” he added.

According to the report, the next generation of advisers and their clients are expecting certain levels of innovation, including the ability to tailor and personalize, the kind of convenience that allows access through a smartphone, pricing transparency, insights into what their peers are doing in the space, the ability to research, and engaging content.

And it would be a mistake for asset managers to assume that working primarily through intermediaries protects them from the pressure to stay ahead of the technological curve.

According to the report, one-third of millennial investors are validators, which means they consult with financial advisers but also do their own research. Those investors will be visiting websites and following social media activity to research investment ideas and recommendations from advisers.

Ultimately, there is no gap in the financial services supply chain where a business can avoid the influence of the younger digital natives.

“Firms that do not start leveraging data and technology now to provide a more convenient, seamless and personal experience will start losing business to firms that do, and quickly find themselves too far behind to catch up,” the report states.