Client Experience Matters: The Case for Driving Growth in the Self-Directed Investment Channel

The full-service brokerage model is in the midst of evolutionary change. Financial institutions are breaking down the silos that have kept their banking and wealth management businesses separate and realizing the importance of integrating the two in order to deliver a unified experience to the customer.  The wealth management model of the future will deliver full-service advice more effectively and efficiently through a financial advisor and an online platform that delivers mobile and social capabilities.

The banking industry participants recognize that they are in the middle of a major industry shift, evidenced by the record number of attendees at our third invite-only bank-brokerage roundtable event, held last week. We brought together executives from banks, brokerages and other financial institutions in New York City to foster discussions about the opportunities a self-directed channel provides. We also spoke about the importance of enhancing the client experience in order to retain and attract investment assets, for example, the evolution of the integrated wealth management service model and the technology behind it. This brings me to the next major theme discussed, which is the fundamental role technology plays in the online channel, which was also evident in the successful case studies that were presented.

One of the main points of focus for the attendees was the Gen X and Gen Y segments. Currently, banks are at a great advantage, as they hold the majority of the Gen X and Y investors’ money in checking and savings accounts. As this client segment amasses wealth over the next 10 years, banks should be prepared to offer brokerage services in order to retain these assets. In fact, younger generations are more likely to shift assets in favor of better online tools compared to older generations, according to Aite Group research presented by Alois Pirker and Sophie Schmitt at the roundtable.

Unless banks embrace the self-directed investment channel, they stand to lose out to competitors. Gen X/Y assets are predicted to grow to $18.3 trillion by 2020, according to Scott Stathis, Managing Director and COO at BISRA, who moderated the session. With this much at stake, the banking industry cannot idly sit on the sidelines.

We hope to continue this discussion in future roundtables and online in our LinkedIn group – The Bank Brokerage Executive Forum.

Find out more about our brokerage solution – Scivantage Investor.

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