By Bryan Bashaw
There’s a highly talked about digital disruption that’s been happening in the wealth management industry in recent years. Much of this talk has been about robo-advisors, but now there’s a transformation happening that’s changing the conversation again.
New Digital Disruption Transforming Wealth Management Industry
Where are today’s wealth management clients turning for advice? There’s been a recent and very significant shift in the industry. In FinTech Innovation: from Robo-Advisors to Goal Based Investing and Gamification (Wiley, 2016), wealth management thought leader Paolo Sironi says:
“The wealth management industry is transitioning from a distribution channel of products into a channel of financial advice, which only a mix of FIN innovation (goal-based investing) and TECH innovation (automated and digital advisory platforms) can facilitate.“
This shift changes business models and the way wealth managers are rewarded (fee-based advice versus brokerage transaction costs).
The days of calling your broker to invest in stocks are over; the broker is no longer relevant to clients. The future of wealth management will be an amalgamation of today’s completely self-directed portals, robo-advice platforms, and advisor interaction.
The complex pieces of a client’s financial status that cannot be solved by technology are where the human advisor adds value. To be valuable, advisors must holistically understand a client’s financial picture when it comes to tax, estates, financial planning, etc. For example, according to the Survey of Consumer Finances (SCF), education debt increased substantially between 2010-2013, while median family incomes decreased. Advisors who look out for their clients’ best interests will understand this trend and educate their clients on the cost/benefit of attending college.
Wealth managers must find the right balance between human interaction and technology to effectively meet the needs of the mass affluent market, where their services are needed most.
Technology enables advisors to achieve economies of scale while providing consultative advice based on a client’s entire financial picture. With SS&C’s Global Wealth Platform, data is aggregated across multiple accounts to provide a holistic view of a client’s finances. The platform is flexible; it accommodates all middle- and back-office functions and integrates best-in-class platforms so the advisor can use preferred financial planning/CRM tools. Billing is customized at a granular level to account for commission-, fee-, or retainer-based billing.
Ultimately, the industry will move to a form of blended billing to track advisor services. To learn how SS&C’s Global Wealth Platform can help you navigate this industry shift, please download our brochure.