Experts Reveal Top Trends Driving the Wealth Management Industry

Recently, we partnered with AmericanBanker to host a webinar on the top trends and opportunities driving change in the wealth management industry. The trends Aite Group discussed touch different areas and include regulatory issues, balancing the needs of 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 and cut through the noise to bring lasting value to their clients. Vertical integration, especially among larger incumbent firms, was one major trend we discussed. The new value chain is challenging the legacy model, as more firms are engaging technology and using “robo-advisors,” especially as the price clients are willing to pay for services fall. For many firms, technology is becoming a viable option to reduce costs and handle more clients. As the industry changes, conference panelists said they expected to see more wealth management firms acquire fintech vendors, not only as a way to increase profitability and market share, but as a technology and talent grab as well. Technology, often an afterthought for many wealth management firms, is now majorly influencing existing business models. Thanks to fintech acquisitions, as well as pursuing younger, more tech-savvy clients, panelists noted that traditional wealth management firms’ digital advice strategies are beginning to proliferate so they can transition to digital wealth management. 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. Another trend discussed for 2016 is the way startups are setting the pace for investing in innovation. Startup Robinhood, for instance, is eschewing the transaction-supported model in favor of freemium and subscription-based / zero-cost transaction models. That’s because 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. But all data is not created equal. Data also needs to be robust enough to enable data analyticsand predictive analytics, so that you can create actionable ways to manage money or advise on your client’s money more effectively. In order to bank on these wealth management industry trends, advisors and institutions have to be willing to change their value proposition to focus on who really matters: the end consumer. To learn more about the top 10 trends in the wealth management industry, watch the on-demand webinar here: Capitalizing on Innovation: Top Trends Driving Engagement in Wealth Management. To find out how payments, retail, data, and technology are revolutionizing the future of financial services, join us at the Money20/20 Conference in Las Vegas October 23-26. Visit Envestnet | Yodlee at booth #2826 to see how data aggregation and data intelligence can truly engage your wealth management customers.