Like It Or Not, Technology is Changing Wealth Management - Here's How

Published on Jan. 17, 2019

Technology is turning businesses upside down, and the Wealth Management industry is no exception. The change so far has been outstanding. But, what does the future look like for wealth managers? What’s technology going to bring them, and how should they adapt?

We don’t have a crystal ball, but we have something substantially better. We have talked to some of the best professionals in Wealth Management and fintech. All of them are aware of how innovation is changing the Wealth Management industry, and they have told us how they believe the Wealth Management industry will look like in 2025. 

Fintech companies and wealth managers alike share their views with us (and, now, with you!).

Waiting for customers won’t be an option

That’s Chrys Doyle’s view. Doyle is Co-Founder and Chief Investments Office at Grove, a fintech company specialized in providing financial advising to those customers not usually targeted by the big Financial Institutions: The under-40 demographic. 

For him, the Wealth Management industry will be different in a few years. “I think the big transformation that’s going to happen in Wealth Management is the switch from being reactive (with customers calling in and asking questions) to being proactive”. 

“When a client syncs his account with us, we have such a wide variety of data available. We can see their balances, see if things are changing in their lives. So we can reach out to them and get ahead of it,” says Doyle. “I think that is going to spread across the industry. Wealth Managers will be less dependent on clients and will be able to be ahead."

The time for collaboration is coming

Ninou Sarwono is Open Innovation Lead at Capital Group, a financial institution ranked among the world’s oldest and largest asset managers. 

From his point of view, collaboration is key when we think about the future. “I believe that there is going to be a partnership a lot more collaborative between large firms like us and other financial institutions.”

From our point of view, collaboration with startups is key. Nowadays, there are around 6,000 Fintech startups registered only in the Americas.

Competition is too big, and Financial Institutions cannot afford to be on their own anymore. The part fintech companies are playing in wealth management is increasingly important, and that’s why many firms are choosing to collaborate. As we see it, this collaboration will only grow in the future.

Specialization as a need

From Sarwono’s point of view, “the problems that are going to be tackled will be a lot more specialized”. 

Sarwono believes that the big issues, like AI, will already be solved by tech giants such as Google. Right now, those challenges are being solved by startups. In the future, those startups will need to offer “a lot more specialization on the solutions that they bring to firms like Capital Group.”

Machine learning applied to workflows

That’s one of the things that Sage Wohns', CEO and Founder at Agolo, foresees.

“By 2025, we will see machine learning augmented workflows across both Wealth and Asset Management.”, he says. 

From his point of view, rather than completely automating workflows, machine learning -well applied- will help analysts, providing them with “guidance and context for actions” and simultaneously enhancing their work with an “expert workflow.”

Tailor-made content 

“We will also see continued improvement in distribution,” says Wohns. “Content today is largely aimed at specific channels,” like “web or emails.”

The CEO of Agolo thinks the future will be a bit different: “Going forward, clients will demand highly personalized content delivered via an appropriate channel. Your personalized market update, with a listenable version for your Alexa device, short summaries for email, or the full version to be read online will be expected.”

RegTech will simplify compliance

RegTech is one of the main digital trends in Wealth Management nowadays. And it will only get bigger. Jeff Heine is Chief Revenue Officer at Ascent Regtech:

“By 2025, both regulators and asset managers will have adopted RegTech solutions to improve the speed, accuracy, and actionability of both the delivery of new regulation and the implementation of those updates throughout the lines of business,” he says. 

In his opinion, “the compliance processes that are highly manual today will be digitized. Integration will continue to improve, meaning that adoption of these technologies into large organizations will see a kind of agility that today’s businesses lack as they struggle with legacy systems and internal red tape.”

And that’s good news for Financial Institutions: “As RegTech becomes a de facto part of the tech stack within the wealth management industry, stakeholders will benefit from reduced risk, increased efficiency, and significant capital gains."

What about an all-in-one solution?

That’s Milan Suri’s view for the future. Suri is Co-Founder and CEO at Pensio. And this is his forecast for the Wealth Management industry:

“I think the wealth management industry will continue to consolidate and largely turn away from a commission-based model. Advisors will continue to play an important role where customers want a high touch relationship as a supplement to an online experience,” Suri says. 

“I imagine the most successful firms will figure out how to be transparent and fair with their customers but also make it as easy as possible to work with them. This might sound simple, but it's still quite a fragmented industry. Often times, customers will have a financial advisor, one or more insurance agents, one or more retail bank relationships, an accountant and an attorney. Usually, these folks don't communicate among one another and when they do, it leaves quite a bit to be desired for the customers. An innovative, tech-driven one-stop shop with high, medium & low touch optionality would be intriguing.

"The retirement and healthcare challenges people face today may not all be new, but they are growing and becoming direr, and with modern technology, I would expect to see more products that are currently used in fragmented, exclusive pockets become more transparent, simplified, and accessible. This doesn’t mean that specialization will go away, but it will become more integrated."

ESG will continue to grow

Hendrik Bartel is CEO at TruValue. From his point of view, ESG will play a key role in the wealth management industry that’s coming. By 2025, he expects to see ESG integration as an established trend.

ESG integration is on the rise because investors are demanding it, and because more and more advisors understand the evidence for why it boosts returns. Most asset managers know that ESG data are emerging mainstream finance metrics. More than half of global assets today, $59 trillion, are controlled by asset managers or owners who consider ESG factors. The results are there, too: thousands of studies since 1970 show a positive relationship between ESG criteria and corporate financial performance.”

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