December 11, 2023

FinTech is Disrupting Traditional Asset and Wealth Management

FinTech—shorthand for financial technology—is transforming the asset and wealth management industry. This overhaul is rooted in how technology manages financial assets, enhancing efficiency, accessibility, and personalization.  

As our world becomes more digitized and fast-paced, traditional wealth management is quickly becoming a thing of the past. The market is no longer exclusive to those with significant wealth or approaching retirement age. Instead, it is now appealing to individuals in different stages of life who want to secure their present and future financial positions.  

Additionally, people no longer want to be told what to do—they want to participate in it—having a more hands-on role in managing their money and assets. Therefore, providing personalized recommendations at scale requires the use of FinTech, including artificial intelligence (AI) and machine learning (ML), to deliver the self-service advantage that clients desire.  

While it’s easy to let the term “disruption” trigger alarm bells, this change doesn’t have to be negative. Something “new” means increased opportunities and benefits for businesses.  

FinTech is Good for Wealth Management 

FinTech’s integration into wealth management is highly beneficial for companies willing to take advantage of technological advancement. FinTech harnesses the power of progression and innovation to provide deeper insights into market trends and client behaviors, enabling more tailored and strategic investment advice. These trends inevitably pique the interests of a more modern audience, allowing financial institutions to stay at the forefront of Industry 4.0 and looking forward to a fifth industrial revolution focused on humans’ ability to collaborate effectively with machines.   

By establishing a foothold in the future with technologies such as AI, ML, and blockchain, FinTech offers financial institutions a competitive edge that can endure beyond potentially bypassing traditional face-to-face financial advisors. This opens the door for a more streamlined and customer-driven approach to wealth management that keeps financial services relevant.  

Overall, the infusion of FinTech into wealth management simplifies complex financial processes and aligns investment strategies with modern, dynamic investor profiles and preferences. This makes wealth management more responsive, efficient, and client-centric than ever before.  

If you are hoping to leverage FinTech for a more impressive bottom line that capitalizes on digital transformation, consider the following: 

Wealth Management is Available to Everyone 

Wealth management is no longer just a thing for the affluent. FinTech has made wealth management services accessible to a broader audience with tools like robo-advisors and online investment platforms. These tools offer lower minimum investment requirements and fees, allowing entry-level investors to access services traditionally reserved for high-net-worth individuals.  

In a 2021 whitepaper on how FinTech helps address the financial needs of the underserved, the Electronic Transactions Association (ETA) stated: “An inclusive financial system is one that provides consumers and businesses with access to a variety of financial products and services, and a key driver of financial inclusion is the development of new technologies… Expanding access to the financial system not only empowers consumers to take control of their financial well-being, but also creates a more resilient and inclusive economy.” 

Although many of these changes have occurred over the past decade, the COVID-19 pandemic created more rapid advancements. The global pandemic disrupted businesses and daily operations, essentially shaking up the norms we had largely grown accustomed to. Yet, it became beneficial in pushing many technologies forward. Similarly, stimulus funds and heightened access resulting from the pandemic put more consumers in the driver’s seat of their finances, enabling a broader, untapped audience for financial institutions. 

AI and Data Analytics Are a Big Deal 

AI and big data analytics have enabled more nuanced and personalized investment strategies. According to Forbes, nearly half (45%) of wealth managers believe financial guidance steered by data analytics and AI insights can help fine-tune client services and investment advice. Additionally, 36% believe AI can help clients better understand their investments by offering enhanced transparency and sensibility behind decision-making.  

For example, data collection can review customer demographics and individual financial needs to assess different scenarios that can either prompt or deter immediate spending. By providing interactive and personalized solutions, people can quickly review and determine risk and overall impact when changing financial plans.  

With technology taking the helm of repetitive and multifaceted analytic tasks, financial advisors can focus on coaching their clients to make decisions that bring them closer to their goals and desired outcomes. While clients are still predominantly convinced (54%) that advisors are most influential in their wealth management, some also believe (one-third) in FinTech’s ability to tip the scales in favor of more adept advice.  

Advisors agree with the significant benefits of AI and analytics, with an overwhelming 86% believing it’s “important or highly important” in personalizing their clients’ experiences and nearly half (45%) saying it changes their financial guidance.  

Investment Decisions Can Take Place Anywhere at Anytime  

The shift to digital platforms means clients can now manage their investments, view their portfolio performance, and access financial advice anytime, anywhere. This instant access aligns with the modern expectation for on-demand services, allowing for real-time data insights to help investors make informed decisions about asset allocation on the spot.

According to Gonzalo Pradas, head of wealth management at Openbank (an online bank headquartered in Madrid, Spain), a new or younger generation of investors “expect technology in their investing experience.” Pradas attributes wealth managers’ ongoing success to FinTech, such as AI, robotic automation, and digital platforms. He suggests that these technologies and the thrust into the digital world allow wealth managers “to serve [their emerging audience] in an optimal way.” 

Basically, financial institutions would be giving their clients what they want. The bonus is that digital asset management (DAM) solutions also facilitate compliance with regulatory requirements by maintaining thorough records and documentation. Financial regulations can be complex, but FinTech through DAM platforms can help streamline compliance through RegTech solutions. This enables wealth managers to navigate the complexity more easily and efficiently—all while maintaining high client data protection and privacy standards. 

The Best Experiences Drive the Most Engagement 

When customers enjoy a product or service, they want to talk about it. More importantly, they want to be a continued part of it. That means providing users with all of the above and an exceptional experience. That’s where FinTech comes in—the latest tech solutions can offer interactive and user-friendly interfaces to help enhance client experiences.  

In addition, FinTech can keep wealth advisors in touch with their customers by enabling regular, automated communications and updates. This further promotes engagement between advisor and client and with clients and their investments, encouraging them to stay abreast of their finances and future goals.  

Likewise, there’s a trend toward integrating wealth management with broader financial services like banking, tax planning, and estate planning, offering a holistic approach to personal finance. This enhanced visibility and all-encompassing experience makes it easier for customers to see their exact status or the entirety of their financial situation when making changes.  

Finally, the best experiences are fostered with a high level of trust. As mentioned, FinTech leads to greater transparency in fees and investment strategies, prompting a shift in how wealth managers justify their value and build solid client relationships. As stated by the World Economic Forum (WEF), “Reputation and trust are hard to build but easy to lose. Wealth managers know that well.”  

WEF explains how trust in the wealth management industry has declined over the last 15 years following several financial crises and economic setbacks. The key is to restore faith in the industry via digital competency, catering to the next generation while still considering the former. According to WEF, the answer is threefold: heightened transparency, customer merit and appeal, and shareholder value.  

Beginning with transparency, WEF concludes, “Wealth management clients and the general public will only trust what they know and understand.” Despite the inherent risks in the investing business, WEF acknowledges that there are “broader, higher rules and commitments [needing to] be adhered to,” and balancing those obligations with a client’s long-term best interests is vital.  

One way to stand apart in letting customers know who their financial institution is, what they’re all about, and that they care, is to care about what their client base cares about. Technology has made it easier to screen investments based on environmental, social, and governance (ESG) criteria. This aligns wealth management with growing client interest in socially responsible and impact investing, putting financial advisors at the forefront of the Fifth Industrial Revolution.  

Oxford Can Help Digitize Wealth Management 

While digital transformation is not for the faint-hearted, it certainly is for the trend-setters hoping to navigate new, lucrative waters flowing straight into an uncharted yet promising future. And there’s no reason why financial institutions should have to traverse those waters alone.  

Digitization doesn’t have to be cumbersome—let Oxford help. We have the experience, knowledge, and skills to bring financial institutions into a more digital and rewarding future. We can provide reliable and secure FinTech solutions for your business that challenge the more conventional ways of handling wealth management.  

And with our tried-and-true Oxford recruiting model, we can guarantee The Right Talent. Right Now. Our Oxford consultants have niche expertise that puts them at the height of their careers. We are confident in their ability to reshape the wealth management industry to remain relevant, productive, and profitable, moving into a widely untapped prospect ripe with new possibilities.  

Quality. Commitment.

Whether you want to advance your business or your career, Oxford is here to help. With nearly 40 years’ experience, we know that a great partnership is key to success. Start a conversation today.