Wealth Management App: Transforming Financial Strategies

Growing Reliance on Digital Devices

A study by J.D.Power found that Millennials and GenZ have a strong inclination towards digital communication. To be specific, digital means are their main communication channel for advice (56%), planning (59%), and service (74%). The older generations, like Boomers and Gen X, still prefer direct interaction with financial advisors for planning and consultation.

Increasing expectations in wealth management solutions come with the growing reliance on mobile devices. A 2016 study by McKinsey has pointed out the following significant facts:

• The study mentioned robo-advisors Betterment, Wealthfront, and Future Advisor as “digital attackers,” meaning companies with a digital-first approach in the finance world. Even though affluent individuals were slow to adopt digital advice, those who did were 5 to 10 times happier.
• This can be attributed to the “ digital attackers” customer-centric approach.
• The study admitted that web and mobile experiences were crucial as customers were also more aware of the digital wave.

Overall, the writing on the digital wall is clear: Holistic wealth management is here to stay. Enterprise Apps Today predicts that wealthtech will capture a formidable 30% of the market by 2025, showcasing a dramatic shift towards digitalized solutions that offer a comprehensive, one-stop-shop for all financial needs.

Demand for Improved Client Service

As we’ve mentioned earlier, those who experience digital services for wealth management are generally happier. Wealth management apps play a major role in facilitating the relationship between clients and wealth management firms. For example, every time a client has requests or questions, they can simply message their financial advisor. Gone are the days of waiting in offices or on calls for simple answers.

McKinsey Affluent and High-Net-Worth Consumer Insights Survey also showed that monthly communication with clients, instead of once or twice a year, has increased customer satisfaction scores by 52 percent.

Need For More Engaging Digital Experiences

Despite the rise of digitization after the pandemic, clients have reported dissatisfaction with their personalized wealth management experiences. Over 60% of high-net-worth individuals reported frustrating experiences when trying to access details about new wealth management products or market updates.

A well-designed app will not only keep your customers happy but also your wealth advisors satisfied. Powerful, user-friendly wealth management apps are game changers for financial professionals, enabling them to serve clients better and assist them in achieving financial success.

User-friendly

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A highly-rated app is a user-friendly app. Users shouldn’t stop in their tracks and wonder what to do next with the app. Tools for financial management and real-time insights should be easily accessible. Complex apps require a sharp learning curve and have a hard time keeping users engaged.

Automated Portfolio and Investment Management

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Top-tier wealth management is a comprehensive endeavor of both investment returns and planning. Retirement planning, college savings and insurance needs must also be taken into account. Other services like financial planning, one-on-one sessions with financial advisors and even financial planning software should also be included. All these tools form a well-rounded approach to wealth management that meets the various needs of today’s investors.

Another crucial aspect of the wealth management app is the use of AI in the apps. Accenture has surveyed to truly understand the impact AI has on the wealth management industry. The numbers speak for themselves:

• An overwhelming 83% of financial advisors are convinced that AI will significantly impact the client-advisor relationship, with more than half of them forecasting a transformative or revolutionary future for financial advisory.
• AI’s potential to grow financial advisors’ businesses organically is crystal clear, as 9 out of 10 advisors believe it can generate a business growth of over 20%

However, 50% of the participants also admitted they were under pressure to implement their AI vision.

Security of Accounts and Data

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Financial apps contain extremely sensitive information about their clients. Hence, robust security measures should be a top priority. This includes two-factor authentication, data encryption, access control, and data privacy policies.

Low Fees and Costs

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Determining appropriate wealth management fees allows investors to retain more of their portfolio returns over time. Fees can be assessed through various factors:

• Fee structures, e.g., asset-based fees, flat fees
• Management expense ratio for investment accounts
• Account minimums
• Trading commissions

Understanding these factors ensures that these fees don’t eat away returns while still providing valuable services to investors.

Betterment

Betterment is an American financial advisory firm that offers services for cash management, retirement planning, and digital investments. Betterment is a platform that allows users to set financial goals, such as emergency fund building, long-term investment, or retirement savings through IRAs. Users provide personal details and can link their bank account for deposits. The app suggests customized investment portfolios.

Betterment Strengths

• Low fees
• Tax management features, with tax-loss harvesting
• Different portfolios for different goals
• Fractional shares

Betterment Drawbacks

• Doesn’t offer direct indexing
• Risky emergency fund

Who Should Use Betterment?

• Hand-off investors
• Retirement investors
• Those who prefer goal-based tools

Wealthfront

Wealthfront is an automated service firm. Wealthfront is a robo-advisor catering to customers wanting to maximize their wealth through technology. The app offers investment accounts, retirement accounts, college savings plans, and cash management accounts with tailored preferences.

Wealthfront Strengths

• Tax-efficient trading strategies
• 529 education investing accounts
• Bank account with modest yield and no fees
• Low advisory fees

Wealthfront Drawbacks

• Feature-richness can lead to information overload
• Absence of fractional share trading means possible excess cash holdings

Who Should Use Wealthfront?

• Hands-off investors
• Those with 529 college savings plans

SoFi Automated Investing

SoFi is an app that offers stock trading, robo advisor, and other social trading features. SoFi Invest comes with a range of services, including active trading, retirement savings, cryptocurrency trading, and automated investing. After answering basic risk-tolerance questions, SoFi recommends a customized portfolio, and users can contact a financial advisor if needed.

SoFi Strengths

• No yearly advisory fee
• Free portfolio management
• Only need $1 to get started
• No additional cost for access to financial advisors

SoFi Drawbacks

• No tax-loss harvesting
• Limited track record as a trading firm
• Limited account types

Who Should Use SoFi?

• Beginners and young investors
• Hands-off investors
• Those who need help with financial planning

Intuitive Design

The app should provide a seamless user experience. This means the app is easy to navigate right from the signup process. Updates on your finances and other real-time insights should be easily accessible.

Customizable Investment Options

Templates in investments are appreciated, but so is the ability to customize one’s investment options. The ability to hand-pick individual stocks and funds, enjoy the benefits of automated rebalancing, and harness the power of dividend reinvesting are powerful tools that allow investors to craft a personalized investment strategy, tailoring it to their unique financial goals and preferences.

Advanced Analytics and Tracking

A stand-out app goes beyond intuitive navigation and stunning designs. It also generates reports and analytics to help investors and wealth managers gain a deeper understanding of asset allocation, tax implications, portfolio performance, and more.

Available Account Types and Offerings

Look for apps that offer an all-in-one solution for your daily financial needs. This entails

• Various account offerings, e.g., IRAs, trusts, joint accounts
• Features like debit cards, savings accounts, and even loan services

Managing multiple financial products in a single app streamlines users’ financial lives and increases engagement with the app.

Customer Support and Transparency

Customer support is paramount. As wealth management involves a multitude of decisions, look for apps that offer educational resources, clear pricing and disclosure, and other social support resources.