Asia’s affluent may be ahead of their global peers when it comes to using technology for managing their finances, but the region’s wealth managers are “dangerously” behind the digital adoption curve, according to research by PwC. 

In fact, noted the consultancy, they are oblivious to the demand of their clients, incorrectly believing that clients prefer the conventional wealth management service – that is, face-to-face meetings. Wealth managers also tend to believe that their digital offering is already sophisticated, even though the only evidence of them having a website, noted PwC.

The firm surveyed about 1,000 high-net-worth investors globally from late 2015 to early 2016, including some 300 in Asia Pacific. It found that Asia Pacific has a higher take-up of digital services.

Seventy-seven percent of HNWI respondents in the region, versus 69% globally, are using online and mobile banking, and almost half of them are using digital services to manage portfolios.

By contrast, just a quarter of wealth managers offer digital channels beyond email.

“The wealth management industry remains focused on a conventional way of servicing clients,” said the report. “This may come from strong tradition of wealth management primarily being a person-to-person business and a widely held belief that the clients are resistant to any form of digital audit trail.”

But the survey suggests this is no longer the case. The results show that more than half of HNWIs in the region and worldwide (55% globally, 62% in Asia Pacific) believe it is important for wealth managers to have a strong digital offering. The proportion rises to 64% among those under 45 and in Asia.

The demand is strong across both younger and older HNWIs globally, although under 45s were notably more interested in online portfolio management than older clients.

Globally, of those under 45, who do not use robo-advisers – which provide automated portfolio advice via algorithms – almost half (47%) would consider doing so. This percentage is higher among respondents in Asia Pacific.

Though data security and privacy is a concern, HNWIs are willing to trade this to enjoy greater convenience and a tailored experience.

In contrast, wealth managers are in the early stages of digital adoption; few have automated and digitised back-office and administrative functions, noted PwC. Worse, they are oblivious to their technology inadequacies.

“Some are even overestimating their firm’s digital capability, rating it digitally sophisticated when the only service they offered to clients is a website,” said PwC. Hence it is no surprise that wealth managers do not consider robo-advice a threat and they repeatedly insist that clients do not want digital offerings.

When asked how satisfied they were with their wealth managers, only a third of HNWIs in Asia Pacific said they were very satisfied, and the same proportion would recommend their wealth managers to others.

This low level of advocacy, coupled with clients putting a higher value on investment performance and products and services than on rapport with advisers, means wealth managers cannot rely on brand and relationship to compensate for their lack of digital offerings, said PwC.

“With a client base that feels only weak affiliation to its chosen providers, the sector is now acutely vulnerable to digital innovation from fintech incomers, including robo-advice services, which may be able to offer a closer watch on investment performance and offer a broader range of products and services,” said Justin Ong, Asia-Pacific asset and wealth management leader at PwC.

“Ignoring this state of affairs is not an option,” he added. “If firms do not respond now, they simply will not survive in the medium to long term.”