How Wealth Tech, A Sunrise Sector, Is Driving Opportunities In Investment Management

A change in investor demographics. A new generation of clients who expect more than convenient, functional, and seamless experiences. Years of underinvestment in technology that’s resulted in an urgent demand to create a digital ecosystem that will propel differentiation in the market. Cybersecurity threats that proceed relentless pace with emerging technological innovations.

These are but some of the challenges facing wealth management firms as they seek to accelerate the wealth technology (wealth-tech) they need to serve personal and institutional clients. For those who are able to keep up, such developments in wealth-tech have been creating winning market opportunities.

The wealth industry has undergone changes through waves of innovation. The earlier insular, product based, in-firm applied science has given manner to a DIY investor era, focused on more than interest and interactions by wealth firms with their clients, different customer segments and providing them with digital, self-serve solutions.

With rapid advances in technology over the years, as wealth-tech’due south influence and adoption rate past wealth firms increases, the time between each new wave of wealth applied science innovation decreases. This makes it imperative for wealth managers to focus their efforts on initiatives that help them capitalize on these innovation waves, and that starts with keeping informed of current wealth-tech trends.

To help industry leaders stay electric current and position themselves to succeed, nosotros accept identified five strategic initiatives they may desire to pursue.

The five strategic initiatives

  1. Continue enhancing client experience to run into changing demands
  2. Transform engineering to drive differentiations
  3. Strengthen client relationships through data-driven recommendations
  4. Invest in cybersecurity to combat rising risks
  5. Preparing the workforce to derive more value from wealth-tech

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Go on enhancing the client experience to meet changing demands

The customer experience has been the prompt for the digital transformation journey of wealth direction companies. Digital leaders take typically invested in making the experience one that is convenient, functional, and seamless, qualities that accept go staples of client expectation.

Next-generation clients, however, are looking for more than. They desire:

  • Intimacy, built through long-term relationships as well every bit frequent and compassionate engagement.
  • Relevance, solidified by solving their central needs in a timely and effective way, fifty-fifty when those needs stretch beyond traditional offerings.
  • Perceptiveness, demonstrated past the identification of their evolving needs and solution options, both explicit and implicit, and through their own participation in evolution of such solutions and experiences.

Clients these days expect an exceptional experience that’due south tailored to their needs, regardless of the channel or expanse of the organization with which they’re dealing. To earn a few quick wins, wealth-tech leaders could consider enhancing the following areas:

  • Customer onboarding:
    With no in-person meetings for many during the pandemic, the emphasis on a fully digital client- onboarding experience has increased. By introducing dynamic digital forms, digital confirmation of client identity, e-signatures, document uploads and verifications, and take chances profiling and scoring to correctly gauge a client’s risk tolerance, onboarding tin be completed with minimal delay. Various out-of-the-box products customized for the Canadian market are already being used in this space.
  • Stop-to-finish process optimization:
    Many wealth managers are at present looking to consolidate their disparate processes into one seamless, artificial intelligence (AI)-powered workflow for specific client outcomes. Incorporating this workflow into a value chain for all wealth operations ensures efficiency is built into the model, freeing up advisors’ time from work that’s mundane and generates no value. Examples where such automation can be used are any repeatable and labour- intensive processes or synchronizing between two disparate customer relationship management (CRM) systems. One caveat: while this provides a quick fix, the full potential of intelligent automation tin can’t be explored if the system’southward back-role technology stack is obsolete.
  • Richer client collaboration and experience:
    Subsequently growing more than tech- savvy during the COVID-19 pandemic, clients are not only seeking a seamless digital experience, but likewise a richer ane. Integrated video conferencing and collaborative engagement tools tin can move CRM beyond basic contact information and investment reporting. Incorporating these innovations can support building a goals-based programme with the customer, help model different market scenarios, and accept the potential to spark a more than interactive conversation with the client.
  • Other aspects to consider:
    Virtual reality (VR), augmented reality (AR), and mixed reality are changing the digital mural. In wealth-tech, this may hateful incorporating VR assistants for clients, chatbots, and voice and tongue processing into CRM platforms. According to a 2020 Gartner report, more than half of wealth firms take deployed conversational platforms or plan to practice and then presently, with 38 percent of those identifying customer experience as the area where conversational platforms will have the virtually affect.two

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Transform technology to drive differentiations

With a technology debt caused by underinvestment by both vendors and wealth managers, there’s a real urgency to create a technology ecosystem that will help wealth firms compete and differentiate themselves in the market. This is especially the case for internal systems, which cannot be apace established without meaning upfront investment.

The ability to form partnerships with vendors, businesses, and clients beyond a wealth manager’s domain is a true commuter of digital transformation. It tin can help managers simultaneously achieve multiple goals, such as filling product gaps, strengthening distribution, and exploring new value streams. As an example, values that have previously been too challenging to reach can now exist unlocked thanks to next-generation wealth-tech, which can extract more meaning from existing processes and information.

While many wealth-tech ecosystems are currently available on the marketplace, no single one suits all purposes. Wealth managers need to implement the correct network for their organisation. This decision starts with some key questions:

  1. What areas do I want to play in: a total spectrum of advice, or a highly specialized segment?
  2. What should exist sourced externally and who should it be sourced from? What should be built internally—and how do we build it?
  3. What is the right governance model for partnerships in my ecosystem?
  4. How do I ensure the evolvability of the wealth-tech ecosystem?

Trending cadre technology considerations include:

  • Agile/lightweight architecture:
    As the emphasis on digital transformation grows, many wealth direction firms are finding themselves constrained due to monolithic platforms that are hard to reconfigure and deploy. These firms have started decoupling such architecture so the backend can be accessed through awarding programming interfaces (APIs) or microservices. A microservices compages can add new functionality to wealth management systems by creating, deploying, and testing new services, and getting them to market faster. A microservices/service-oriented compages non only offers scalable solutions, but also insulates the backend to avert whatever direct attacks or misuse. APIs are a widely used engineering in the wealth management space and at that place seems to be little ambition for slowing down investment—87 pct of firms indicate they will non be reducing investment in this technology, according to the Gartner written report.2
  • Human/science-based advice:1

    Advisory models based on data science, ordinarily known every bit robo-advisors, have the potential to expand the market place, attracting customers who could non previously afford a personal counselor or were not comfortable with human advice. Financial advisors can effectively outsource some aspects of their work past using robo-advisors to provide algorithmic-driven informational services. This allows them to focus their time where they tin can add together the about value for their clients and differentiate themselves, such as past focusing on circuitous customer needs and scenarios. Incumbent wealth management firms will need to invest in edifice the engineering science platforms and tools that will enable this hybrid advisory model, which incorporates the best of human- and science-based advice.

cws spectrum

  • Customer reporting:
    With high-net-worth clients demanding more transparent, authentic, holistic, clear, and real-fourth dimension reporting, regulatory forces are pressuring wealth firms to provide more in-depth reporting to their clients. Some firms take been using low-code solutions, which can be used easily by various business functions without the demand to utilize IT staff to manage them, to generate tailored reports for their clients. And some clients are using vendor products or making utilize of a third-political party, software as a service (SaaS)-based product to generate and customize their own in-house reports.

    Equally goal-based planning becomes the footing for financial communication delivery, wealth management firms volition need to access data from a variety of areas. This information can be mined through financial planning software, aggregation software, proposal- generation tools, CRM and analytics tools, and other platforms. Through a combination of these sources, firms tin create a well-rounded view of a customer’south unabridged fiscal life.

    The foundations for robust client reporting can exist built by putting in place:

    • An integrated information repository, supported past a data architecture that centralizes data from disparate sources, which serves as a single source of truth for the unabridged enterprise.
    • A client analytics engine
      that links the applications and engineering science to let the effective harnessing of centralized data.
    • Client feel applications
      that utilize analytics to back up more customized interactions with clients, using real-fourth dimension information to amend coordinate the wealth firm’s marketing, sales, and service personnel.
  • Wealth planning:one

    Investors value holistic advice on how to achieve multiple, often conflicting goals through a range of investment and funding strategies. Across wealth thresholds, client expectations are increasing; they now have greater involvement in advice than in buying products. Investors’ needs are too expanding beyond traditional investment advice to include more holistic fiscal- and life-planning offerings. Firms are evolving their functioning measures and incentive structures due to the importance of communication-based wealth management, leading to advisors being measured past whether they meet clients’ goals rather than beat market place benchmarks. Leading wealth managers have invested in developing and preparation staff on goals-based advisory frameworks and tools, in addition to wealth planning software. With increasing assets under management (AUM) growth targets, firms not only demand to revisit their asset management distribution strategy, just also to equip their advisors to encounter heightened demands from their clients and regulators. They must also consider the increasing pressure to lower investment fees due to market competition and production commoditization in the wealth industry.

Firms are evolving their performance measures and incentive structures due to the importance of advice-based wealth management, leading to advisors being measured past whether they meet clients’ goals rather than shell market benchmarks.

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Strengthen client relationships through data-driven advice

The long-term relationship betwixt clients and advisors is also changing, becoming less transactional and more similar a partnership. Advisors have a great opportunity to strengthen these relationships by stripping any bias from their advice speedily and consistently through advanced data- driven intelligence, thereby condign trusted partners. This would create options for clients, such as portfolio optimization, that would non exist possible without data and avant-garde intelligence and modelling capabilities.

With the help of diverse tertiary-party systems, wealth firms are at present developing more descriptive and predictive analytics that combine internal and external structured and unstructured information to create more than complete, insightful customer profiles. This enhanced insight will allow firms to appraise the propensity of existing or potential new clients to purchase diverse products and services, a client’due south lifetime value, investment style, and risk tolerance.

To date, the industry has identified just some of the benefits these new analytical capabilities could hold.i

Near WM cadre processes will be impacted past advanced analytics

Business performance management

  • Track business results and key drivers (customer segments, advisor books, product penetration, etc.)
  • Reveal and track advisors’ propensity to adopt various tools and methodologies

Client conquering

  • Leverage internal & external information (social, TP data bases) to create comprehensive

    prospect profiles
  • Map relationships and generate

    client leads

Customer retention

  • Leverage aqueduct and social data to assess client sentiment and

    client risk

    existent fourth dimension (instead of surveys)
  • Leverage external/internal data to understand client interests, connections and personality create best

    client/advisor match

    to increment connectivity and stickiness

Customer sales

  • Leverage external data sources to create

    Net Worth


    Share of Wallet

    profiles for existing clients
  • Measure customer’southward

    propensity to purchase

    various funds or types of communication
  • Assess

    client lifetime value
  • Correlate transaction and channel data with market events to reveal

    client true take chances tolerance

Client advice

  • Leverage client survey and other data to create tailored

    portfolio allocations
  • Rebalance portfolios real time and generate existent time,

    merchandise/ investment ideas

    based on client preferences and marketplace events
  • Leverage cognitive calculating engineering to create Q&A capability and provide

    person-to-machine advice


  • Compare personality and investment profiles with investment/trading activities and client actions to flag



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Invest in cybersecurity to combat rise risks

Cybersecurity is one of the biggest challenges facing wealth-tech firms today, with cybersecurity concerns evolving every bit quickly as the tech innovations themselves and testing best practices in the industry. Coming together cybersecurity requirements and managing security risks must exist at the heart of everything.

As the digital channels used by wealth managers go more global, firms’ technology platforms must be able to provide secure access to information someday, anywhere, and on whatsoever device. They need to ensure that whatsoever solution they implement, its associated cyber risks are understood and its safety measures are used beyond the whole enterprise.

To successfully mitigate these cyber risks, attention and investment needs to exist made in both applied science and people. That can be done a multifariousness of means. Employing avant-garde AI and auto learning to aid deflect threats are some of the near common practices, as are adopting cloud-based delivery models that promote greater consistency of controls. Organizations tin also start cultivating cyber talent for key roles, such every bit defender or strategist. Biometric solutions, advocated by many wealth firms and fiscal institutions, apply technology such as vocalization and face up recognition equally well every bit fingerprint and wearable-technology scanning to non only provide an added layer of security, merely also customize the experience for the client.

Most crucially, the priority should be on ensuring take a chance-sensitive assets are at the centre of cyber protection measures. Asking frontward-thinking questions about cyber risks is usually the best preparation for the unknowns that are probable on their way.

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Preparing the workforce to derive more value

Wealth managers are starting to put an equal amount of attending on the man chemical element of a transformation journey in engineering science. This trend is being spurred by the level of disruption caused past new technologies, new business organization models, and, most recently, the touch on of COVID-19 on workers.

Managers who recognize the need to reskill and upskill their talent will reap the most benefits by not just retaining the existing clients but also attracting new ones. The key questions they need to recall near include:

  • How do I identify what skills and capabilities my workforce will be required to have?
  • How do I foster a culture of lifelong learning so that the accent on reskilling and upskilling volition be continuously promoted within the firm, by the workers too as leaders?

We believe wealth-tech firms that will see the best returns volition base their skills-enhancement program on a twofold strategy: delivering a blended experience of online learning and a social-experiential apprenticeship and building lasting capabilities through learning based on solving real-world challenges.

This is a time of significant alter and disruption in the wealth-tech industry. To stay ahead, firms volition need to continually work on their people, process, and technology initiatives. Building for the future will crave wealth managers to define strategic choices, surface constraints and gaps, and align their leaders on the ambition to lead the market and the way to do so.


  1. Deloitte. 10 Disruptive trends in Wealth Management.
  2. Gartner. (2020). Acme 10 Wealth Management Technology Trends for 2020.

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