Survey: Mobile investment apps are first stop for many – especially Gens Y, Z

Here’s a tip for wealth management advisors: Get your digital apps in order or you’re missing out on a major market.

A study by J.D. Power found that mobile apps have become the first resources investors consult to review their portfolios, make transactions, and conduct research. The trend is particularly noticeable among younger investors, who have higher satisfaction, brand awareness, and loyalty when they engage with their investment manager through digital apps.

This conclusion might seem somewhat obvious in today’s techno-obsessed world, but what can be inferred from the J.D. Power’s assessment is that the wealth management industry has been slow to join the digital highway and has resisted or delayed integrating mobile and computer apps in its business.

Wealth management firms 'way behind'

“If you generally look at the quality of the digital experience that wealth management firms are delivering, they're way behind what other brands are doing,” said Michael Foy, senior director of wealth intelligence at J.D. Power. “They're trying to play catch up and there's a lot of opportunity to improve.”

Foy said wealth management firms that want to attract and retain younger investors need to focus on improving their apps, which are becoming the center of the modern wealth management client user experience.

“App users are engaging much more frequently with their brand and, when they have a positive experience, are also much more likely to recommend that brand,” he said.

Findings in the J.D. Power U.S. Wealth Management Digital Experience Study included:

• Apps significantly outperform websites
• Well-designed apps are crucial for younger investors
• Apps drive strong brand loyalty
• Apps are important for full-service investors, too

“Contrary to the perception that mobile wealth management apps and websites are primarily designed for do-it-yourself investors, overall customer satisfaction scores are higher among advised investors, who are more likely to use the digital financial tools provided by their wealth management firms, including tools that help connect them to their financial advisor more efficiently and conveniently,” the report said.

Reasons for the wealth management industry’s late entry into computer apps are three-fold, Foy said. Clients tend to be older and less interested or adept with mobile apps. Many wealth management firms still rely on outdated technology. And there’s also security concerns about viewing and transmitting financial records over a mobile phone or computer.

Some 'unique challenges'

“The demographics of their client base means there’s not as much demand for digital apps.” he said. “So they have some unique challenges, especially the big banks and brokerages which have a lot of legacy back-end systems that are challenging to pull that data together. With wealth management there’s a lot of functionality that needs to be supported.”

The study evaluated customer satisfaction with the wealth management digital experience, inclusive of both apps and websites, based on four factors: visual appeal, navigation, speed, and information/content. This year’s study was based on responses from 6,375 full-service and self-directed investors and was fielded from June through August 2022.

“Digital has become a key component of the overall wealth management customer experience,” said Amit Aggarwal, senior director of digital solutions at J.D. Power. “Firms that are delivering the best overall digital experience are recognizing that their apps and websites are an extension of the client relationship and can be leveraged to improve relationships with advisors, drive brand loyalty and differentiate from the competition.”

Customer satisfaction with mobile wealth management apps was highest among members of Generation Y, with an average score of 760. Members of Generation Z follow with an average score of 720. Members of Generation X, Boomers and Pre-Boomers – all of whom are more likely to use their wealth management firm’s website – have lower satisfaction with mobile wealth management apps, the report said.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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