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Wiley Tech Revolutions (Wealth Tech (Introduction (Investment and…

- - - - Investment advice and distribution. Smart algorithms have led to the emergence of robo-advice, which could potentially address the advice gap as adoption scales. A key opportunity area for incumbent players will be to use hybrid models and goal-based advice. These solutions use complex algorithms to support life- stage planning, taking clients’ full-life situation (today and in the future) into account. Current options include:
      - • Automated transactional advice – providing investment insights, data analytics and automation of risk identification, community intelligence and end-user-created wealth solutions. However, early solutions are very transaction-driven, don’t provide “real advice” and are typically not well suited to holistic financial advice.
      - • Guided advice (hybrid) – providing investment strategies, investment advice, facilitation of customer interactions and advice on risk management, tax planning and financial planning. The technology performs the transactions, but leaves it to relationship managers to communicate with clients, creating an overlay of human interactions to create a quality experience.
      - ° Goal-based investment (advised) – providing goal-based planning, product and investment selection, asset allocation, optimization of risk and return, and tax optimization.
        • There is a clear opportunity for FinTech in the area of holistic and comprehensive financial advice delivery. Algorithm- based propensity models and life-stage planning could outplay a significant portion of human-based investment advice.
    - - Investment management. FinTech makes investment management services accessible to individuals who are not yet high-net-worth individuals. Technology has the opportunity to speed up processes around decision-making, rebalancing and monitoring. Other investment management capabilities that are well suited for FinTech entrants include asset selection, discretionary management, settlement, etc.
    - - Account administration. FinTechs are surging ahead by automating many elements of account maintenance and using self- service to support 24/7, multi-channel interactions.
    - - In some instances, the programs provide start-ups with financial backing, giving the supporting institution first-hand insight into potential partnerships or buying opportunities.
    - - If wealth managers are able to integrate these developments into their existing business models and operations, it makes key aspects of running a larger business significantly easier.