Wealth Technology: Reshaping Wealth Management Recruitment

In this modern world, the prevalence of AI and technology in every sector is rapidly increasing, and wealth management is unsurprisingly no different.

Wealth technology, or WealthTech as its known, is a specialised area of financial services technology (fintech), which as the name suggests, uses innovative technology-driven solutions to enhance the way wealth management and investment services are offered.  Using technology, certain tasks can be automated and personalised, improving efficiency and reducing costs, thus making wealth management more accessible to everyone – but what are the joys and the risks?

We aren’t quite at the point yet where there’s a robot sat opposite you at a desk, but there are certainly automated platforms providing algorithm-driven financial planning services with little to no human supervision. They are able to create and manage client portfolios based on individual risk tolerance, goals, and preferences.

However, some people feel that Financial Advisers “need to wake up and smell the coffee” if they believe artificial intelligence (AI) is not going to take over their jobs.” Financial Technology Research Centre founder and director Ian McKenna said. 

• Data analytics (Big Data) can analyse huge amounts of financial data to identify investment opportunities, detect patterns and provide insights.  Using historical data and predictive analytics can help advisors and clients make more informed decisions, so they can present tailored investment recommendations.  This is all very impressive!
• Wealth Management software provides Financial Advisers with the tools to help them manage client portfolios, track performance, and generate reports, all with a high degree of accuracy – streamlining the client management process and making them more efficient.  Clients are able to access their information via a front-end dashboard wherever and whenever they need

Client onboarding can also be simplified with the use of new digital systems and identity verification ensuring compliance with Know Your Customer (KYC) regulations.  Document management systems, although not a new technology are developing fast and are more and more in use, easily able to link to other systems for help in a number of areas – workflows etc.  They also ensure you are complying with the necessary and numerous regulations.

It’s easy to see why any Financial Planners that have tech skills in their arsenal are becoming increasingly sought after. Interestingly though: “Only 6% of IFAs are using artificial intelligence tools in services. This is despite nearly half viewing AI as an opportunity.”  https://www.professionaladviser.com/news/4338136/ifas-artificial-intelligence-tools-services

Making Wealth Management accessible to more people, expands the client base.  WealthTech increases the financial literacy of users, enabling them to make informed and confident decisions. If people have a lack of experience, they may feel awkward about consulting a professional – no one wants to look stupid after all!  

Accessing technology to increase financial knowledge and provide an insight into the world of financial advice, increases confidence and gives those who may not have otherwise felt able to consult a financial adviser, the push to do so.  This provides more clients for advisers:

• The younger generation of investors are quite technically savvy. Their first instinct may be to gravitate to WealthTech rather than wanting to meet with someone that they don’t necessarily identify with 
• Data driven automation provides a timely personalised portfolio, based on individual risk tolerance and a client’s goals.  Potentially, a technically minded Wealth Planner can provide more advice in the same amount of time, and possibly with a higher degree of accuracy
• Capitalising on technology and AI means that they can theoretically manage a larger number of clients acquired from retiring IFAs, but with the same personalised touch
• Improved efficiency with certain tasks and account management being automated frees up the adviser so they can focus on more complex client needs and strategies.  With the technology doing the background work, the adviser is once again, able to provide more advice, to more clients, in the same amount of time 
• WealthTech platforms can provide investors with enhanced transparency into their investment performance and fees.  Clients can manage their portfolios online with real time access and a clear view of transaction history.  In this modern era, the need to have 24/7 access to information is critical to many
• Tax Planning is a big consideration for clients, and the automation of this makes planning easier and more accessible, saving time, money and a great deal of stress. Fintech technology is able to collate data, connect to relevant financial information and perform tax calculations, making this complicated area, less of a headache

There are real concerns that the increase in automation will remove the human touch.  We all want the best advice, and whilst technology may have access to a larger amount of real-time data than a human and use fancy algorithms to process it in a quicker amount of time, it lacks (funnily enough!) a human touch.

There are many options for self-service now – however it can feel overwhelming and finding someone you trust to talk to is vitally important to clients: https://www.professionaladviser.com/news/4336199/financial-ceo-advisers-add-value-self-service

When it comes to matters of finance, these can also be deemed matters of the heart, and a human touch, a discussion, a sounding board if you will, are often extremely crucial.  Financial decisions are not made lightly for most people, and those making them need to be sure they are doing the right thing.  They may have questions to ask and scenarios to run through and this is preferable face to face with an actual person.

As with all great things in life, it’s all about balance.  The balance in how financial advice is delivered in the wealth management market.

• Yes, move with the times, as it opens up faster and more efficient ways of working and in-depth research for clients
• It encourages more first-time investors who love technology adoption
• It increases the mass market approach to would be investors as there are a lot of people with less wealth, who still need advice. As many Bancassurance arms have closed in the last decade, it has left some people with less options. Robo-advice and online platforms are helpful
• It’s missing the personalised touch and expertise honed over many years. Yes, clients can answer a suite of automated questions, but what about things that they have not considered, what about their financial blind spots? This is one area where an experienced Wealth Planner can add personalised value to the client, by gently probing in these areas to help and support their clients’ financial needs

There is a great case for using both WealthTech as a standalone, and also as a supportive tool for the tech savvy Financial Planners who utilise the dual advantages of financial expertise and technical acumen.

As this technology continues to evolve, we expect to see WealthTech play an even greater role in shaping the future of financial advice.  Competitive companies that seek to thrive will seamlessly mix the role of AI and WealthTech with the advice given by human advisers to create a dynamic service for their clients: the best of both worlds, providing the best advice.