The Digital Advisor: Successful Transformation for a New Era

Building a new is much easier than renovating. This is precisely why most disruptive innovation occurs in newer, often smaller and more nimble firms. Following this thread, most large and traditional banking and other financial services firms have enjoyed a long period, 3-4 decades by our assessment, in avoidance of much renovation. That comfort is quickly coming to an end.

Disruptive innovation is now permeating more of the financial services spectrum. Starting with retail-oriented banking services, this migration is heading towards more institutional segments. New entrants, born in the digital age, are now delivering smarter and more personalized solutions – all with a mobility component to them, and even some with a “mobility-first” approach - that are cheaper, faster, and easier to use. These forces show no signs of abating. TABB Group believes that the next wave of innovations will impact self-directed investment advisory, wealth management and related investment services.

Given that the entire financial services industry is still in the early stages of its most transformational period of the modern era, how advisory services - both retail and institutional - navigate such unprecedented change will have everything to do with how well they maintain a successful franchise. A critical challenge in this transformation is the need for incumbents to innovate along with digital-era upstarts but while also right-sizing their often bloated cost structures. Turns out, incumbents have some advantages too. Among them is the value and richness of their data. With analytics being a key element of digital offerings – along with omni-channel consistency and enhanced user experience designs – the main question now is whether the incumbents can change fast enough.

In this 13-page, 4-exhibit TABB Group Focus Note, The Digital Advisor: Successful Transformation for a New Era, we provide some specific color on the migration of disruptive innovations in the digital age - many of which have their roots in the retail-oriented end of the financial services spectrum - into wealth management and institutional investment advisory services. Furthermore, we detail how digital innovation is impacting incumbent advisors, as well as, offering specific strategies for how to compete in this evolving landscape.