It’s that time of year, when we start thinking about what we can expect to see in trends for the New Year in the wealthtech sector. This time, we thought that rather than pontificating on what WE think will occur in 2019, we’d let the EXPERTS tell you themselves. To that end, we have asked several C-Suite wealthtech executives and thought leaders to share what they think will be key trends in general and what they may also be working on at their firms.
Based on the responses below, 2019 looks to hold some VERY interesting new directives for the wealth management sector. The technology luminaries in this piece tell us we will see further movement into new wealthtech platforms, wider adoption of robos, more utilization of sophisticated risk management modeling tools, health screenings integrated into advisory services, more emphasis on compliant digital communications, new retirement directives, automated tax optimization, higher adoption of APIs, new regtech initiatives and much more. It’s all BREATH-TAKING and EXCITING! Take a look!
– Keith Gregg, Founder/CEO of Chalice Financial Network
“We see a movement towards the great unbundling of technology solutions, and more ala carte choices and pricing. API connectivity is becoming common place, and access to digital marketplaces – are the go to shopping place for Independent Wealth Advisors. FinTech providers are focused on AI and machine learning for greater adoption and scaling their platforms. The future is very promising for FinTech enabled Advisors, as they seek to SIMPLIFY and AMPLIFY their businesses. Chalice will launch the Chalice Financial Network ™ in 2019, a member benefit organization for Independent Wealth Advisors and unveil the Chalice Advisor Exchange ™ – a digital marketplace with products, services, tools, and technology created to support the entire life cycle of an Advisors business – Start-up, growing, running, succession planning, and sale of the business. As I like to say of Chalice…’Can you say SBA for RIAs meets Amazon Prime for Advisors’.”
– William Capuzzi, Chief Executive Officer of Apex Clearing
“The debate about human versus robo is over – consumers enjoy and expect great digital experiences in all areas of their lives, including financial. In 2019, the hybrid advice model – human + digital – will evolve with a full spectrum of capabilities from robos with light advice to high net worth firms fully integrating digital tools and touch-points for their clients, and everything in between. Fintechs and advisory firms will race to create online experiences to complement traditional client relationships – playing catch up. At the same time, a new wave of disruption will emerge, as tech companies and non-investment financial industry players figure out how to use digital platforms and data to move into wealth management. They will wrap services around an intimate knowledge of a customer’s life-cycle and behaviors. Need a loan? How about cash flow planning to help you manage that debt? Maybe some insurance too – and we can help you start saving, then investing, and planning for education, retirement and other goals. We can add an advisor, or let you do it yourself, but it will be faster, easier and more cost effective than ever before. The point is that when information flows easily and seamlessly, a better kind of industry convergence is possible where we move past product channels to providing more fluid access to the services people need, when, where and how they want it.”
– Ron Carson – Founder & CEO of Carson Group
“Wealthtech Fulfills Beyond the Financials – If 2018 was the year of further tech integration in financial planning and asset management, 2019 will be the year wealthtech begins to weave its way more seamlessly into our lives, making financial services about more than the financials. Digital tools will help firms create more compelling value in the first micro moment of engagement. For Carson Group, that translates to how we’re exploring the possibility of dementia testing with our financial plans to provide a more personalized experience. Flexibility within wealthtech will also take center stage, as API-first vendors seek to allow more firms and advisors a-la-carte optionality by selecting pieces that solve a unique challenge. It’s something we consider a key factor, more than anything else, when selecting our tech partners. Even specialty solution providers within tax optimization, like LifeYield, present options to not only help advisors improve their clients’ financial health but enable advisors to offer a more well-rounded, compelling experience.”
– Robert Sofia, Founder & CEO of Snappy Kraken
“There are essential ways that consumers expect to interact through technology that are largely underutilized in the WealthTech space. These include SMS messaging, chat bots, and intuitive mobile interfaces to name a few. Compliance restrictions have been a roadblock for many in financial services when it comes to utilizing such tools, but I expect barriers to come down in the year ahead. I also anticipate that better aggregation of data will enhance customer profiles resulting in more personalized and relevant marketing communications.”
– Aaron Schumm – Founder & CEO of Vestwell
“There’s a lot going on in the retirement space, broadly speaking, with more movement than we’ve seen in a long time. This trend looks to accelerate in 2019. Eyes are widening, realizing the opportunity at hand to help the smaller end of the retirement plan industry. Large wirehouses are announcing their move into the SMB space. Retirement specialist advisors are revamping their playbooks to service clients down market. Federal legislation is trying to address the need and servicing options of smaller companies via open multi-employer plans (MEP). Flexible, powerful, scalable, yet consumable technology will be the driving force behind helping the U.S. workforce save effectively for their future. We are also going to see flexible creativity play a strong role in driving adoption. Some solutions already taking off include the incorporation of wellness solutions for participants that roll up to advisors, participant loan processing tools, student loan payback options via a 401(k) plan, and seamless HSA and IRA workflows with intelligent investing. Ultimately, the industry will move towards highly functional, powerful platforms that are light, intuitive and consumable by everyone.”
– Kyle Hiatt – EVP Business Development of Orion Advisor Services
“Heading into 2019, the regulatory environment for RIAs is looking to be more complex than ever, with no sign of relief in sight. Yet one fact remains certain: executing an effective compliance program has never been more important to firms of all types. It won’t be enough for firm’s to simply have written policies and procedures. Fortunately, the right use of technology can significantly improve a compliance officer’s ability to identify and control risks as well as ensure compliance with firm policies and procedures. Even more, the ability to leverage a single technology source to automate tasks and track results has the potential to transform a firm’s compliance program.”
– Vincent Pellegrini – Senior Vice President of Vestmark
The S&P 500 is up 400% from its intraday low 10 years ago — yet most players in the advice supply chain are struggling with slow growth and shrinking margins. Fee compression, fractured & costly distribution, rising customer acquisition costs and legacy technology are some of the primary reasons organic AUM growth remains elusive. To overcome these headwinds, we’ve seen the following four trends: for national, regional and larger independent BDs: Advisory Program rationalization; for BDs, Large RIAs and RIA roll-ups: Technology platform consolidation; for asset managers and individual advisors: Model delivery; and across the advice supply chain: Outsourced middle & back offices.
While we expect many of these trends to accelerate in 2019, they’ve guided Vestmark’s strategy and roadmap for a number of years. From the software side, we’ve continued to future-proof our platform. VestmarkONE is the only portfolio management solution that lets you run your business as it stands today – while providing the flexibility and scale you need to consolidate onto a single advisory platform in the years ahead. On the outsourced services side, we’ve expanded our suite of services for sponsors and asset managers – adding new model delivery, model marketplace and trade order management services. Lastly, with Vestmark’s recent acquisition of Adhesion Wealth Advisor Solutions, we’ll accelerate the development of Adhesion’s white-glove outsourced managed account platform built specifically for RIAs and independent BDs.
– Jigar Vyas – Founder/CEO of Invessence
“We are focused on bringing digital advisory platforms to the DC/401(k) market. There are a tremendous amount of benefits to be gained by both the end consumers, the trustees on one side and the planned asset managers, the administrators and the custodians on the other side. All will benefit from automation efficiencies. There will also be a focus around client education. Our view is that this space will particularly evolve for smaller trustees. Innovating the space with automation and AI will be one of the agendas for Invessence in 2019. The other agenda item for Invessence will be to continue to expand our global footprint as in 2018 we launched the Utrade Robo in Singapore for UOB Kay Hian. We will be developing unique solutions for other global firms in Asia and the Middle East as well as in the US market.”
– Aaron Klein, CEO of Riskalyze
“We’re seeing more and more advisors empowering their clients to invest fearlessly by starting the conversation with risk. Risk has become the tip of their spear for client acquisition and client expectations, and we see the advisor of the future building better portfolios and implementing investing decisions through the lens of risk analysis.”
– Kevin Hughes, Chief Growth Officer at MoneyGuidePro®, Created by PIEtech
“Though we see some hesitation from advisors in response to changing their methods, the trend we see continues with financial planning being at the core of most firm’s business models. We believe that the solution remains with firm wide planning adoption. To solve for this, MoneyGuide will be building a platform that creates a friendly and familiar way for advisors and clients to engage at a pace that they can control. Tune in to our announcement, in late January 2019 at the T3 Advisor Conference, to learn how this trend will revolutionize how the industry perceives financial planning.”
– Nicholas W. Stuller, Founder and CEO of MyPerfectFinancialAdvisor
“2019 will see an acceleration of the already fast-growing renaissance of wealth technology activity between startups, large firm participation and smaller firm collaboration. The opportunity for technology firms serving the wealth sector are extraordinary, however the flip side is the wealth market of advisors and firms will have even less time to decide which firms to partner with. For me, the most exciting opportunity in 2019 will be in the wellness category of wealthtech, which is in its very early stages. The demand by employers and employees for anything financial wellness oriented is significant. From standard investment management and planning to more specific needs like home buying, budgeting and even alternatives to payday loans are all ripe for innovation from wealth technology firms. Employers are an efficient gateway to improve consumers lives, and employers recognize financial wellness concerns impact performance, and therefore will have great interest in these new solutions.”
– Dara Albright, FinTech Author, Speaker, Influencer
“I believe that fintech and regtech will have enormous implications for wealthtech. First and foremost, it will vastly expand the number and scope of investment products that a financial advisor will be able to offer clients. I also think we’ll start to see more mergers between conventional wealth advisory firms and technology-centric financial firms. Finally, I predict that “wealthtech” will begin to dramatically alter the demographic make-up of a typical client of a financial advisor as smaller clientele will be pushed further toward tech-centric financial platforms.”
– Larry Shumbres, CEO of Totum Wealth
In 2019 we will see more machine learning and some AI. The AI term is being tossed around similar to how the robo advisor was a few years ago. AI needs a lot of data to work along with tested algorithms. You can’t go from API to AI and too many people are confusing machine learning with AI. So again, we will start to see machine learning be used and added to more wealthtech tools in 2019. Speaking of robo advisors… more of these online tools will continue to morph into online financial planning and financial wellness tools. More of an all in one digital financial advisor with access to an online advisor. Humans will always want reassurance from an actual person… at least for now, so they will coincide. Finally, risk is back on. The bull market is over, don’t listen to CNBC. Corporate buy backs were the only thing holding up the US markets in 2018. Now that run is over. With volatility comes uncertainty and with uncertainty comes investors calling their advisor to find out why their portfolio is down 20%. If these advisors have an accurate risk tolerance tool in place they will reduce the amount of time they have to spend talking their clients off the cliff. When I say accurate, I mean tested quant models and easy to use risk questions for the client. Not your typical market volatility questions. The questions have to be meaningful for the client and help the advisor… focused more on facts then feelings.
– John Mackowiak, Chief Business Development Officer at Advyzon
“I think we will continue to see advisors demanding more services from less technology vendors. In the past, advisors would typically look to one vendor for each capability and then hope for the best with integrations. Over the last several years, vendors are either looking to add or tighten integrations or building entirely new feature sets in-house. We’ve even seen several acquisitions intended to accomplish this. For their part, advisors seem to be warming to the concept more and more. We talk to quite a few who may not have considered consolidating their technology just a few years ago and are now not only open to it, but are quite interested in it. The key for advisors is to engage staff and carefully consider “must have’s” ahead of time to ensure needs are met.”
– Paul Gamble, CEO at 55ip
“The continued growth of investment models, but with technology allowing advisors to customize for client needs – Home offices such as advisor firms and broker dealers who are using models are benefiting from the consistency of management across advisors from a fiduciary and compliance perspective. On the distribution side, asset managers are finding it more difficult to compete selling individual mutual funds and ETFs, so there is a rush to offer models or sleeves as a more compelling way to deliver their products. Advisors see the value of models and outsourcing investment management to help scale and grow their practice, yet many fear that they will lose their perceived value if they fully outsource investment management. They are also concerned that off-the-shelf models can’t be customized enough to meet unique client needs. If the market volatility of late 2018 continues in 2019, and overall market growth is no longer buffering investment management inefficiencies, the need for customization capabilities and demonstrating value to the individual client will be imperative. As a result, advisors are demanding model customization at scale. That is, having a model as a starting point, but then using technology and other capabilities to customize to meet unique client needs and goals, such as risk and tax management.”
– Jim Jones, CEO at IRAEXCHANGE.net
“Embracing alternative assets under management for their clients’ IRA has, for advisors, historically been hampered by a limited ability to monitor and transact within the account with any efficiency. The myDirection Pro tool for advisors and sponsors launched by New Direction Trust Company in partnership with the IRAeXchange is a harbinger of an imminent future in which advisors can easily manage alternative assets alongside publicly-traded investments.”