Experts Reveal Top Trends in Wealth Management

Recently, we partnered with AmericanBanker to host a webinar on top trends in wealth management. Panel speakers included Alois Pirker, research director; William Boland, senior analyst; and Javier Paz, senior analyst, all with Aite Group’s wealth management practice, as well as Jay Hummel of Envestnet®, and John Bird, Envestnet | Yodlee®.

Moderated by AmericanBanker’s contributing editor Michael Sisk, we had a lively panel discussion on the various trends and opportunities that are driving change in wealth management at leading financial institutions.

The trends Aite Group discussed touch different areas, including regulatory issues, balancing the new trends between risk adverse investors and tech-embracing Millennials, and even dealing with an aging advisor workforce. Ultimately, it’s important for wealth management firms to find the trends they want to take on, cut through the noise, and bring value to their clients.

Below are key highlights from the webinar:

Will Boland said one of the trends he’s seeing is vertical integration, especially among larger incumbent firms. The new value chain is challenging the legacy model, as more firms engage technology and have begun to use “robo-advisors,” especially as the price clients are willing to pay for services fall. That means technology is becoming a viable option to reduce costs and handle more clients.

Boland also said that as the industry changes, he expects to see more wealth management firms acquire fintech vendors, not only as a way to grow profitability and market share, but as a technology and talent grab as well. While technology was often an afterthought for many wealth management firms, it’s becoming more important now, as well as changing their existing business models.

Thanks to these fintech acquisitions, as well as wealth management firms pursuing younger, more tech-savvy clients, Alois Pirker says traditional firms’ digital advice strategies are beginning to proliferate so they can transition to digital wealth management. He says these digital strategies are helping asset management firms serve direct-to-consumer markets, wealth management units of retail banks that focus on mass-affluent and mass-market areas, and high net worth focused wealth management firms that address the needs of family members, particularly clients’ children.

Javier Paz discussed an important trend for 2016, the way startups are setting the pace for investing in innovation. He mentioned startups like Robinhood that are eschewing the transaction-supported model in favor of freemium and subscription-based / zero-cost transaction models. That’s because, Paz said, Millennials want something similar, collaborative, and hip. They don’t just want to look at charts, they want to use their mobile phones to view and interact with financial tools.

When our webinar attendees were asked if they believe alternative data sources, like aggregated financial account data is likely to improve your ability to deliver holistic advice and lead to more informed investment decisions, 85% indicated extremely likely or very likely.

John Bird commented that the data also needs to be robust enough to enable data analytics and predictive analytics, so that you can create actionable ways to manage money more effectively or advise on your client’s money more effectively.

Finally, Jay Hummel elaborated on how to take these trends and understand how they impact your business. Envestnet is currently making an impact on the wealth management industry by serving over 45,000 advisors and financial institutions everyday.

While there is a vast amount of great research from Aite Group, Hummel stated that “none of these trends mean anything if advisors and institutions don’t realize they need to change their value proposition to be able to serve the end consumer.” Essentially, the convergence of these trends mean that “the consumer needs to understand why you’re delivering these services and why innovation is being invested.” There are many ways to quantify value – such as by measuring the five pillars – financial planning, asset allocation, investment selection, systematic rebalancing, and tax management.

To learn more about the top 10 trends in wealth management, watch the on-demand webinar here: Capitalizing on Innovation: Top Trends Driving Engagement in Wealth Management.