Press

On the face of it, the fintech story resonates very strongly in the wealth management business. Established players face revenue and cost challenges and are being squeezed by regulatory pressure on one side and increasingly demanding customers on the other. They have also fallen behind in the technology stakes, just at a time when the coming generation of investors is more tech-savvy than ever.

Into the breach have come the robo advisors – leveraging digital, providing ease of access and transparency, running a low cost operating model and attracting some $50 billion in assets under management by 2015, according to analyst Aite Group.

But as the paper – which is based on interviews with a wide range of traditional wealth managers and robo advisors – finds, the story in reality is more complex. In step with the fintech narrative across the financial industry as a whole, the trend is more towards collaboration than competition, and rather than the newcomers eating the lunch of the incumbents, a model of traditional advisory powered by digital capabilities is already emerging.

As Panos Archondakis, senior director, Wealth Management, EPAM, says: “Advisors typically have too many clients to service properly. They cannot possibly process all the information required, such as data, market news, research and product recommendations, in order to give the same level of advisory service to each customer on their books. Banks can leverage digital capabilities to process that flow of information and identify leads, opportunities, and recommendations that then can be provided to the advisor in a summarised form. And by addressing some of the operational and administrative workload the advisor has to get through just to have a client meeting, the automation of these processes will allow them to get in front of more clients with more relevant topics for discussion.”

The impact of digital certainly needs to be taken seriously, the report finds. While there is hype around robo, it is leveraging the changed buying habits of many people – comparison shopping, self-service, omni-channel, 24×7 – and the imminent shift of wealth to a next generation which certainly favours P2P, groupthink and social prods is a demographic fact. In addition, whatever the limitations of algorithms today, it would be unwise to underestimate just how much they will be able to do in the future.

In this context, the paper explores the different ways in which robo will continue to impact the wealth management industry going forward, and seeks to determine the future of advisory in light of the evolution of technology and its continued adoption by new and established players.