Wealth managers face unique challenges in achieving profitable growth for their practices while also delivering favorable outcomes and a positive overall experience for their clients.
Digital tools are becoming instrumental in achieving this balance, enabling asset managers and investors to work more efficiently and spend less time on manual tasks, allowing them to allocate more time to serving clients.
In this guide, we’ll discuss what is WealthTech, what these solutions can do, and how they can benefit both wealth managers and clients in the digital age.
What is WealthTech?
WealthTech, the convergence of wealth management and technology, represents a modern, tech-enabled approach to managing financial assets. Its growing popularity stems from its ability to streamline and automate what was once a manual and time-consuming process.
The capabilities of WealthTech solutions can vary between specific platforms and vendors. However, the primary purpose of these tools is to assist wealth management professionals in managing the back-end of their practices, enhancing client engagement, and uncovering insights about clients’ financial portfolios.
Key features of WealthTech solutions
WealthTech solutions may offer a range of tools and services to help wealth managers streamline their workflows, including:
- Automation: WealthTech leverages technology like AI, machine learning, and blockchain to automate traditional, manual wealth management processes, making them more efficient and cost-effective.
- Enhanced Accessibility: Platforms may expand access to wealth management services (particularly to new demographics like millennials and Gen Z investors) by lowering barriers to entry, such as high account minimums and the need for in-person interactions.
- Personalization: Data-driven algorithms, artificial intelligence, and machine learning enable WealthTech platforms to offer personalized financial advice, investment strategies, and portfolio management based on individual goals, risk tolerance, and preferences.
- Improved User Experience: Most WealthTech vendors prioritize intuitive and user-friendly interfaces, often through mobile apps, to make managing finances and investments easier and more convenient.
- Data-Driven Decision Making: WealthTech platforms use advanced analytics and data aggregation to provide users with real-time insights, improving financial forecasting, risk assessment, and decision-making.
- Transparency and Security: Blockchain technology can enhance transparency and security in transactions and data management within wealthtech platforms.
- Cost Savings: Automation and digital delivery models reduce costs, making wealth management more affordable for both individuals and firms.
Examples of WealthTech solutions
As mentioned above, there is no standardized WealthTech solution. Depending on the specific platform, users may gain access to a wide range of tools, resources, and services, such as:
- Robo-advisors: Automated platforms offering algorithm-based financial planning and investment management with minimal human intervention.
- Micro-investing platforms: Apps allowing users to invest small amounts of money, sometimes by rounding up purchases.
- Digital Brokerage: Online platforms enabling users to trade in financial securities and products.
- Algorithmic Trading Platforms: Platforms using algorithms to automate trading decisions based on market data.
- WealthTech-as-a-Service (WTaaS): Cloud-native, API-first data and application infrastructure software that helps firms build and scale WealthTech applications.
How WealthTech benefits advisors and clients
Fintech solutions in general are meant to resolve some of the notorious inefficiencies and barriers that the financial services industry is known for.
WealthTech solutions, specifically, can help improve efficiency and service scalability for wealth managers while also making these services more accessible and personalized for clients. Here’s a closer look at the benefits these platforms can offer:
Enhanced client engagement and communication tools
When equipped with a practice management tool, WealthTech solutions can act as an advisor’s customer relationship management (CRM) software. This way, they have one centralized location to track leads and conversions, log all interactions with clients, schedule meetings, and store important information to power personalization.
With this in place, WealthTech tools can enable asset managers to analyze client data and segment clients based on their needs and goals. In turn, advisors can run targeted campaigns and provide investment guidance that’s relevant to each client, which can improve their overall experience and encourage loyalty and retention, resulting in more ongoing business for the advisor.
Improved investment strategies and insights
WealthTech solutions can leverage advanced technologies like predictive analytics, artificial intelligence, and machine learning to provide tailored investment advice and financial plans for the investor’s unique needs and goals.
With access to real-time data, these solutions can drive better financial decision-making on a day-to-day basis, quickly adapting to their changing needs. This might include alerting the advisor when their portfolio’s asset allocation needs to be rebalanced, uncovering investment opportunities, and adjusting an investor’s plan when they go through a major life event like having a child, purchasing a home, or retiring.
Automation of financial planning processes
Lastly, these solutions can help wealth managers generate personalized guidance for clients much more efficiently, without needing to sit down and create a plan for each client by hand.
WealthTech solutions can automate client onboarding and data collection, report generation, and plan creation, giving the advisor more time to meet with clients and achieve goals of growing their practice.
WealthTech innovations and technologies
As mentioned throughout, the current wealth management technology that’s available is already revolutionizing the wealth management space in terms of streamlining advisors’ workflows and improving accessibility for clients.
These platforms will only become further engrained in wealth management practices as their technological capabilities advance and support additional tasks and functions.
For instance, artificial intelligence-powered meeting notetakers can help advisors be more present in client meetings, while still producing detailed notes for their records. At some point, advisors may have access to AI assistants during live calls to provide insights or real-time guidance based on what’s being discussed, which can add value to their client interactions and strengthen their competitive advantage.
Further, Open Banking protocols and APIs will enable a seamless integration of client’s financial data across platforms like their banks, credit cards, and more to provide advisors with a more comprehensive and instant view of their financial positioning.
Adopt BILL into your WealthTech stack
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With enhanced security and privacy, your clients can feel confident making payments through the platform while your team enjoys increased internal efficiencies that can scale with you as you grow.
Frequently asked questions
What is the meaning of WealthTech?
WealthTech is a term that combines “wealth” and “technology.” It describes a type of technology solution that helps wealth managers offer services, manage their back-end workflows, and engage with clients.
What is the difference between fintech and WealthTech?
Fintech is a broad category of technology solutions that support or streamline financial services. As such, WealthTech is just one category of fintech solutions that’s meant to help wealth managers specifically.
What does WealthTech do?
WealthTech solutions can provide a range of tools and services that help wealth managers expand their firms and deliver improved services to their clients. This may include algorithm-based financial planning guidance tailored to a client’s specific needs and goals, a client portal for transparency and 24/7 access, and predictive analytics to enhance forecasting and decision-making.
What are the best WealthTech companies?
The best WealthTech companies are user-friendly and intuitive, both for the advisors and their clients. In other words, these tools should enhance their experiences, not make them more clunky and confusing. Additionally, for the wealth managers, the best platforms offer responsive and knowledgeable customer support and seamlessly integrate with their existing software.
How big is the WealthTech market?
The WealthTech market is quickly growing. A recent report from analysts at Technavio expects the global WealthTech solutions market to grow by $6.08 billion from 2024 to 2028, representing a CAGR of 14.11% during this period. The analysts cite factors like increased digitization and blockchain capabilities as catalysts for the sector’s continued growth.
