The wealthy know that, to stay wealthy, they need to properly manage their money. Often, they turn to a wealth management adviser who provides services including tax and estate planning, legal and accounting services, as well as financial investment advice. Increasingly, wealth management is deploying wealthtech solutions — digital technologies to help people keep, manage and grow their financial well-being.

Just as in other fintech sectors, wealthtech lowers costs, broadens the market and optimizes performance by doing the following:

  • Automating procedures
  • Using artificial intelligence to provide deeper analytical insight
  • Customizing experiences and advice with digital personalization

There are a variety of different technologies and service offerings already on the market. And, as the sector covers so many services, there’ll no doubt be more capabilities, combinations and innovations that will drive the market forward. Wealthtech is not focused on the wealthy, but is democratizing wealth knowledge into the hands of more and more people.

The arrival of robo-advice

Handling finances is a complex, sensitive area. There’s an abundance of information, numerous ways to go about managing money and the outcomes have a significant impact on a person’s quality of life. What if we could get personal financial advice based on our own risk tolerance, income, age and goals? Better yet, how about if we didn’t have to pay costly fees and we could still get exceptional advice even if we don’t have enough funds to be of interest to top-quality advisers?

Enter robo-advisers — advanced software that uses algorithms to provide automated investment portfolio management advice with little or no human intervention. Currently, the sector has $980 billion in assets under management and a growth rate of 27 percent.

While lower fees and lower minimum amounts do generate interest for less wealthy investors, the 24/7 access and sophisticated tools also appeal to high-value clients. In many cases, it’s not either robo-adviser or wealth adviser, but rather both, where the robo-adviser handles certain aspects of the relationship but there’s still a person to answer questions and provide expert advice. At this point, while the tools are becoming increasingly refined, they can’t provide the breadth, depth and insight that a well-informed adviser, or team of advisers, can deliver.

Expanding investment options

It’s not only the delivery of investment advice that is changing; wealthtech is producing more investment opportunities that were impractical or impossible before:

  • Micro-investment platforms allow people to invest with small amounts of money
  • Social trading, where investors mirror the activities of financial influencers, makes investing as simple as a social follow
  • Portfolio management and investment tools continue to improve, delivering better information and management oversight on a broader range of investment options.

New wealthtech apps and services are being rolled out by both new fintechs and incumbents alike. With the possibilities for new customer acquisition and revenue streams, as well as lower cost structures, what’s not to like?

The battle for eyes and wallets

However, wealthtech is fundamentally different from traditional financial advice channels. The years spent acquiring a deep understanding of financial instruments and building up one-to-one trust is not applicable in the same way in a digital world. Deep knowledge and trust are still necessary, but the techniques to develop these benefits are not in conversations over whiskey and cigars, but rather in code and systems.

Winning and keeping customers is now a user experience (UX) issue and the underlying tech stack and algorithms that power the app or service. Can your app sign up users quickly and easily? Does it present information in an easy-to-follow manner? Does it gamify the experience, taking advantage of the latest developments in interface design to make the interaction fun and exciting?

Onboarding – the moment of truth

Perhaps the most important step of the whole wealthtech customer journey is the initial onboarding experience. After all, an onboarding prospect has no vested interest in a service, and moving to another service is only a click away.

As Karen Behboudi, vice president of digital marketing at CI Investments Inc., stated in a seminar, Wealth Management: A Customer Experience Battleground, “onboarding is very important to get upfront trust from the customer. If you lose that, you do the opposite, it’s a very bad start.”

Onboarding is also crucial when it comes to making sure that an effective compliance program is in place. While it’s prudent to regularly perform identity checks, the initial onboarding is typically the stage where the most due diligence occurs. Preventing fraudsters and money launderers from opening an account is the surest way to stop any questionable activity from even getting started.

Wealthtech offers the promise of financial growth for many people who previously had limited access to the necessary knowledge and tools. If done correctly, with proper onboarding, UX, information and analysis, wealthtech can add substantial growth to the financial services industry.



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