Financial institutions have made great strides, from traditional brick-and-mortar organizations to their current, omni-channel digital selves. From mobile offerings to internet banking, we depend on the bank’s digital persona for almost all our banking needs, except perhaps Wealth Management. There has always been something comforting about interacting with a financial advisor, leveraging their knowledge of the markets, and running ‘What-if’ scenarios past them, to build a portfolio that meets our goals.
As Covid-19 spread and everyone withdrew indoors, my appreciation for our digital comforts certainly went up a couple of notches. As we now move towards normalcy, I feel that the pandemic reminded us of the fickleness of life and the greater need to future-proof our wealth. From what I have seen, it also bought a newly evolved investor to the fore. One who is not just planning for their long-term needs like retirement, but is also preparing for short-term liquidity and curveballs. This investor is also seeking advisory that is flexible, and convenient to access.
The ability to do this and more was always in the works, but Covid-19 accelerated the adoption of an intelligent offering. One that combined artificial intelligence and machine learning to offer bespoke near real-time personal money management.
Automated & Intuitive – The next generation of wealth management
Just as Fintech integrated technology into the traditional financial sector, Wealthtech fused innovation with wealth management. The system is designed to gauge a customer’s investment style using a set of questionnaires. Its capabilities go beyond making investor profiles. Wealthtech can recommend wealth products, portfolio allocation and even present an overview of investment outcomes.
With technologically savvy millennials at the helm, Wealthtech is widening its scope of its offerings, bringing in personalised, needs based advisory solutions that cater to various life goals, and eventualities. In a few clicks, the system can create several combinations of asset classes based on risk parameters, that can easily help diversify your portfolio. Say a long-term growth combination of mutual funds and bonds for your retirement, combined with a short-term equities bucket for your house’s down payment; your personal robo-advisor can help you with all that through cutting edge predictive analysis.
These systems can even play out various ‘What-If’ scenarios to simulate real-time effects on your portfolio, bringing in a lot more control and flexibility. Perhaps, the biggest advantage might be the ability to bring this to a big cross section of the population, giving them access to financial planning, which in the past would be the purview of higher net-worth customers.
A future of smart and customized wealth management
Does this obviate the need for human advisors? I don’t think so. Financial planning has always been a relationship-driven industry. Wealthtech gives us a low-cost way to manage investment portfolios, but to understand the complexities of legacy or tax planning, a more human touch will always be needed.
I think the pandemic has revealed the importance of pairing the human relationship with technology. In the post-pandemic world, consumer priorities have changed, and they are looking to build a financially stronger tomorrow. This gives wealth management the perfect opportunity to address this need, with efficient and intuitive digital solutions.
