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AI & Machine Learning

A new model for digital wealth management

Patrick Donaldson

07 Jun 2018

The digital wealth management demands of Millennials and Gen Xers will require financial advisors to adapt their approach so they operate as a marketplace rather than individual vendors.


  1. Successful wealth managers will be those who can demonstrate access to data, news and events, with the capability to use it to drive investment solutions.
  2. The amount of data places the onus on the wealth manager to identify the most relevant information and to filter out the noise.
  3. ‘Wealthtech’ is a rich and diverse ecosystem where value comes from knitting content and workflow together for the benefit of the client.

As we are at the beginning of the Fourth Industrial Revolution, it should perhaps come as no surprise that wealth management is entering a fourth epoch as well.

What is particularly exciting about this era is that it offers a fundamental opportunity to rethink the business of wealth management, rather than simply providing a more efficient replication of what went before.

The first three epochs of wealth management were, broadly speaking: The hand delivery of documentation; the mechanization of those hand-to-hand processes; and the development of computing solutions.

As wealth management has progressed through its various eras, the value proposition has changed. At first, just having a stock price or news was valuable in and of itself.

Then the value came from having information faster.

Once data (such as stock prices) became more of a commodity, value was created by analyzing the data or combining it with other information such as news or earnings, and quickly acting on the analysis.

A new model for digital wealth management. Patrick Donaldson quote

Augmented wealth management

We are now entering a new era, a fourth epoch, driven by technological advances.

Whereas the previous eras developed efficiencies in an established process, the technologies available or in development today enable us to rethink the process.

Rather than simply replicating the established methods of managing wealth, they offer an opportunity to augment these in new ways.

Clients are changing

The average Asian investor is in his or her early sixties and that is likely rise to over 70 within the next few years. More than half of assets managed (53 percent) are already held by clients who are over the age of 65.

Meanwhile, the average advisor is in his or her early fifties, with one-quarter of advisors already at the typical retirement age. These advisors control 25 percent of assets.

Unless there is a material market correction, the Asian wealth market will continue to grow across numerous metrics (assets, accounts and investors) through 2020 and beyond.

Self-directed investors

The good news is that the expectations of the coming generations are very different.

Younger clients are not looking for, or expecting, as much one-on-one attention and they view technology as an important aspect in wealth management.  They want the option of digital wealth management.

Some 57 percent would change their bank relationship for a better technology platform solution, for instance. Therefore, the expectation is that millennials will prefer to be self-directed investors, who can call on expert advice if required.

They will be significantly more comfortable with robo-trading than older generations. Millennials and Gen Xers are more likely to prefer a computer algorithm over a financial advisor (40 percent in each case) than boomers and mature clients (30 percent and 24 percent).

There is one constant among the generations however. As life becomes more complex, all investors, Millennials and Gen Xers included, become more interested in speaking with an advisor.

Digital wealth management

The amount of information, data and news that is generated and delivered daily is massive — and increasing.

In financial services, our traditional definition of data has included asset prices, earnings data, and news.

Digital wealth management now allows data from other sources to be brought together with the advent of greater computing power to provide a much richer view of the world and the investment opportunities it affords.

This wealth of data, and the advent of greater computing power, places the onus on the wealth manager to identify the most relevant information and to filter out the noise.

Cognitive computing can assist with tools such as intelligent tagging and entity identifiers that help to clean and process data to ensure that powerful algorithms deliver insights to investors.

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Marketplace opportunity

The opportunity for wealth managers of the future is to operate as a marketplace rather than as an individual vendor.

The marketplace model enables wealth managers to inter-operate for more efficiency and greater insight by linking multiple solutions, from multiple sources, together on one wealth management platform.

As the potential client base grows, wealth managers can collaborate to provide a wider range of services to attract and retain potential clients. Wealthtech is a rich and diverse ecosystem and the value comes from knitting content and workflow together for the benefit of the client.

Future investors will be looking for opportunities beyond conventional investment strategies.

As digital natives, they will also be highly aware of the data, news and events that generate investment opportunities.

The successful wealth managers will be the ones who adopt digital wealth management and can demonstrate that they have access to all of that information as well, combined with the capability to use it to drive investment solutions.

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Disruption, innovation and opportunity

Read the full article in the WealthTech Bookthe only comprehensive guide of its kind to the disruption, innovation and opportunity in technology in the investment management sector.

It is an invaluable source of information for entrepreneurs, innovators, investors, insurers, analysts and consultants working in or interested in investing in this space.

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