For industries to thrive and remain relevant, they must be willing to embrace change – and the wealth management industry is no exception. As consumers’ lifestyles, priorities, and demands shift, companies must continue to evolve to cater to their needs. Change, after all, is inevitable.
While other industries have been more eager to embrace change and test new technologies, the wealth management sector really took its time. Today, the industry is more open to adopting new technologies and having acknowledged their role in shaping the future of wealth management, we are seeing a number of revolutionary changes, which are setting the stage for the future.
Nobody can tell for sure what it’s going to be like for the industry in the coming years but looking at recent market developments should give us an idea of what to expect.
These are some the latest trends that are shaping the wealth management industry:
Enhanced User Experience
We live in a world where convenience has become a necessity, and most of us demand the same immediacy from those that manage our wealth and investments. Luckily, the industry is rising to the challenge.
The development of API-driven digital technology such as single sign-on, which enables the user to enter one set of credentials to access multiple applications is a testament to the industry’s dedication to enhancing the client’s experience. Money managers and advisors have also made frictionless onboarding a priority, though there is still some way to go before it is fully perfected. Nevertheless, there is significant appetite to keep improving these and other newly introduced tech-enabled processes.
Ultimately, the concept of an enhanced user experience extends beyond client satisfaction. It aims to utilize technology and use it to build a better business environment between wealth management professionals and their clients.
Better security, transparency, and risk management
The manager/advisor-client relationship is built on trust. It takes a great amount of confidence in someone to entrust them with a significant portion of your life’s savings, and wealth managers must never compromise that trust.
Technological innovations in the financial sector have increased the level of security against digital threats and the ever-present threat of cyber-attacks. They have also produced greater levels of transparency and accountability by making it easier for firms and advisors to meet regulatory requirements.
Going forward, wealth management companies will continue to prioritize security and adherence to regulatory mandates as required by the government and their clients.
A hybrid take on wealth management
The incorporation of Artificial Intelligence (AI) technology into wealth management has been one of the most interesting innovations by far. Chatbots and robo-advisors are seen as cost-effective solutions to respond to client demands for accuracy and better customer experience.
However, many industry experts argue that sound financial advice cannot be fully automated as there are scenarios that only human interaction can effectively address. The industry needs to develop an approach that makes the best of both worlds, utilizing technology to yield the best results.
Partnerships and collaborations with fintech companies
As the role of technology in wealth management continues to grow, the success of wealth management firms will be increasingly reliant on the relationships they build with wealth-tech providers. Innovations driven by fintech companies have had a significant impact on the wealth management landscape and they will continue to play a big role in leading the industry into the future.
For these partnerships to thrive, however, wealth management firms must be more open to change and embrace digitalization. They must recognize that a smarter financial ecosystem is no longer a whim but a necessity.
The rise of sustainable investing
Millennials started the move towards making wealth management services more convenient and now, the very same generation has brought sustainable investing to the forefront. This generation has led the trend towards investing into ventures that have a positive impact on society and the environment, and other investors are following suit.
With impact investing gaining popularity at an unprecedented rate, wealth managers are beginning to focus on developing ESG-driven strategies as the industry continues to cultivate an awareness for sustainability.