Value Beyond Measure

Wealthtech puts advisers’ and investors’ minds at ease

More money, more problems, they say. That sentiment especially applies to managing wealth. Traditionally, wealth management has been a labor-intensive undertaking, with financial planners juggling investments, estate planning, tax planning, and asset structuring, often by hand. It’s limited the number of clients advisers could take on and the services they could offer. But as has been the case with many other industries, digital transformation has shaken things up. From robo-advisers that dispense automated advice to customized services their human counterparts can offer, wealthtech has ushered in a new era of wealth management.

The Dirty Work

Wealthtech that automates a lot of the time-consuming paperwork frees up financial advisers and institutions to offer their clients more personalized service. They also make it easier for individuals to take their finances into their own hands. Products like Nitrogen’s Riskalyze drill down to a client’s preferences and goals to determine a level of risk tolerance beyond just basic details like age. In just a few minutes, it assigns a Risk Number based on how aggressive the investor wants to be. Then clients and advisors can build a portfolio based on that Risk Number.

Though it’s, of course, impossible to eliminate risk from investing, the advanced analytics delivered by wealthtech can minimize it. Portfolio Catapult, for instance, builds data-driven investment strategies with the goal of delivering consistent outcomes while helping clients choose and size their investments.

“Our investment decisions, like most investors, center around past returns. The rhythm of past and present can be two very different things, particularly when it comes to investment returns,” co-founder Scott Frank told Wealthtender. “Ultimately, we wanted to build a repeatable, data-driven investment process void of subjectivity and emotion and have the leverage to assimilate an ever-expanding universe of investment products.”

Perhaps the biggest pain point for financial advisers is compliance. Regulations change constantly, and the penalties for non-compliance can be large. Software tools like those from Smartria and RIA in a Box monitor trades and automate alerts if they stray from regulations or a firm’s code of ethics.

“We believe compliance shouldn’t be scary, complicated, or time-consuming,” Smartria says on its website.

Financial advisers across the industry would agree.

Courting the Mass Affluent

“Employing wealthtech solutions allows businesses and banks to comprehend the needs of the next generation of clients,” David Grinberg, director of fintech at TechMagic, wrote.

That next generation includes a lot of the mass affluent – those with between $500,000 and $2 million in investable assets. Previously, financial advisors might have shied away because their overhead made margins on working with mass affluent clients too small. Wealthtech has changed those calculations.

“At long last it looks like the robots are beginning to pull their weight!” Greg Bogich, CEO of AcquireUp, told Wealth Solutions Report. “If you look at automated workflows, streamlined onboarding, and lower-touch processes, what you discover is that many advisors can now access the mass affluent market that was previously cost prohibitive.”

The same tech that made robo-advisers, with low fees and low starting deposits like those from Sofi and Robinhood, possible is making it possible for registered investment advisers to compete with them.

“The rise of low-cost digital offerings highlights the growing demand for accessible financial services among the mass affluent,” Tom Wilson, head of wealth advisory at Orion, told Wealth Solutions Report. “For RIAs, this is a call to action: clearly communicate the value of personalized, fiduciary advice. By leveraging wealthtech to deliver tailored strategies efficiently, RIAs can differentiate themselves and capture market share in the mass affluent client segment.”

With the help of technology, human advisers can provide a more personal touch even when taking on a wider array of clientele. Wealth management isn’t just for the ultra-rich anymore. Access to those services will make it easier for others to climb the wealth ladder, and worthwhile for advisers to make that happen.