{"id":556,"date":"2017-12-11T04:21:11","date_gmt":"2017-12-11T04:21:11","guid":{"rendered":"http:\/\/kusuaks7\/?p=161"},"modified":"2025-03-31T09:40:13","modified_gmt":"2025-03-31T09:40:13","slug":"2020-outlook-how-fintech-transformed-the-wealth-management-industry","status":"publish","type":"post","link":"https:\/\/www.experfy.com\/blog\/fintech\/2020-outlook-how-fintech-transformed-the-wealth-management-industry\/","title":{"rendered":"2020 Outlook: How FinTech Transformed the Wealth Management Industry"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tReady to learn Blockchain?\u00a0Browse courses<\/a>\u00a0like\u00a0Blockchain for Finance Professionals<\/a> developed by industry thought leaders and Experfy in Harvard Innovation Lab.<\/em><\/strong>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe year 2017 was the most pivotal year for wealth management \u2013 technology startups shot themselves in the foot, empowering the next wave of transformation in one of the most asset-heavy segments. Taking their time to watch, interact, and learn, financial institutions have evolved beyond recognition in their strategies. A number of entities have demonstrated the ability to compete with bold technology startups both in terms of adoption of advanced technologies, and costs to the business and consumer.\u00a0BBVA (& FutureAdvisor)<\/a>,\u00a0Wells Fargo (& SigFig)<\/a>,\u00a0Barclays<\/a>,Fidelity<\/a>,\u00a0Capital One<\/a>,\u00a0Deutsche Bank<\/a>,\u00a0Morgan Stanley,\u00a0U.S. Bancorp (& FutureAdvisor)<\/a>,\u00a0TD Bank<\/a>,\u00a0TIAA<\/a>,\u00a0UBS<\/a>,\u00a0Merrill Lynch<\/a>,\u00a0ATB<\/a>,\u00a0China Merchants Bank (CMB),\u00a0Goldman Sachs<\/a>,\u00a0RBC & FutureAdvisor<\/a>,\u00a0BNP Paribas<\/a>,\u00a0Standard Chartered<\/a>,E*TRADE<\/a>,\u00a0China Everbright Group<\/a>,\u00a0RBS<\/a>,\u00a0and\u00a0ICBC<\/a>\u00a0are just some of the most recent examples of institutional response to the rise of WealthTech.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\nWhile certainly opportunistic, wealth management is a segment with high barriers to entry, in addition to being\u00a0highly disproportionate in terms of AUM distribution<\/a>. Vanguard Personal Advisor Services had\u00a0$93 billion<\/a>\u00a0AUM as of September 2017 \u2013 a\u00a012%<\/a>\u00a0growth from October 2016. For comparison, Betterment had \u2018only\u2019\u00a0$10 billion<\/a>\u00a0AUM as of July 2017, Wealthfront had $7 billion AUM as of August 2017, and Personal Capital had\u00a0$5 billion<\/a>\u00a0AUM as of August 2017 (gained $2 billion AUM in 2016 alone).\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe above-mentioned hallmarks served an advantage for institutional players to build proprietary solutions to challenge the hype surrounding startups (with the sheer economics always remaining on the institutional side). Lower account minimums, lower fees, rock-bottom commissions, target audience expansion, automated rebalancing, and, in general, a bet on advanced technology + an expert in wealth management, are\u00a0the new normal<\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tWhile non-institutional players will likely fall victim to overcrowding and consolidation of resources through partnerships and acquisitions, startups changed the face of wealth management in the long term. Robo-advisors powered by technology will diminish the barriers to market entry to a range of whole new types of players.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\u201cBoth financial and non-financial services firms can take advantage, bringing new levels of competition and innovation to the industry. For instance, we will likely see more asset management and insurance firms adding wealth advice to their distribution and effectively entering wealth management; non-financial service firms with access to large numbers of retail investors and leading-edge technology firms will likely also enter wealth management through a robo-advice model,\u201d experts from Deloitte\u00a0emphasize<\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\nWhat did FinTech bring into wealth management exactly? The short answer is AI.\u00a0Thompson Reuters<\/a>\u00a0suggests that cognitive software platforms, which provide the tools to analyze, organize, access, and provide advisory services based on a range of structured and unstructured data, are set to attract investment of nearly $2.5 billion in this year alone.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tOutlining the ways that AI is supercharging the wealth management industry,\u00a0Thompson Reuters<\/a>\u00a0emphasizes the following:\n