thefutureofwealthtechblogpostone thefutureofwealthtechblogpostone


The Future of WealthTech - Part One

Part one of a three part series.

I had an opportunity to speak at the recent Family Wealth Alliance WealthTech Summit. I was on a panel that discussed the future of technology in the wealth management industry. Joining me on the panel was Carl Knecht, President of Risclarity.*

This is part one of a three part blog series that will explore some of the thought provoking questions from that panel discussion. This post will address current technology trends. Part two will discuss emerging technologies and part three will conclude with how firms should put a plan in place to address today’s needs as well as future considerations.

What are some of the major changes you see in the WealthTech industry today that are impacting family offices? Have vendors responded to client demand and shifts in expectations?

The question is not so much has client demand shifted in line with technology, but has technology shifted in line with the demands of wealth management clients and the firms that serve them. Today, firms are seeing an increase in complexity, an increase in the volume of data and an increase in the velocity of change.

Unfortunately many family offices are trying to manage this increase in volume of complexity, data and change with a people first solution. Firms are still reliant on spreadsheets and are throwing bodies at the problem. This has never been a scalable approach and firms need to invest in technology or risk getting left behind. By investing in technology, firms will be able to take advantage of some of the current trends that are impacting the industry.

Some major technology changes that are impacting the market today include:

·       Unlocking of Structured Data – So much information is locked up in documents and PDF files. From the liquidity terms of a hedge fund to the calling of capital for private equity to the provisions of a trust are all locked in documents. Solutions are now being introduced into the marketplace to better manage the flow of this information allowing firms to reduce manual data entry and better manage one version of truth.

Data is the life blood of technology. It all starts with good data and easy access to that data. To that end, Carl Knecht, President of Risclarity noted that firms were moving towards ’owning’ their own data, “While firms may utilize best of breed solutions, they are moving to aggregate their data into their own data warehouses or data hubs so as to integrate across their platforms or provide reporting across their software ecosystems.”

·       APIs Making Integrations Easier - With more and more vendors providing APIs (Application Programming Interfaces), it is becoming easier to seamlessly integrate different systems both from a data perspective as well as a workflow perspective. APIs are revolutionizing the industry by enabling choice and allowing family offices to create best of breed technology solution that best meets the needs of their business. Family Offices are no longer locked into all-in-one systems. All-in one-systems provide a myriad of functions, but not all components are best in class. This mismatching of business need vs. functionality can occur. For example, an office that manages significant bill payment volume may be stuck on a system that has great partnership accounting, but a weak Accounts Payable module.

Carl Knecht confirmed this trend as well. Carl said “When researching potential vendors you need to also research the use of available API technologies.  The future of software is in the ability of these systems to interact and without proper API usage or firms will be left out in the cold. “

·       Better Client Experience – Better Reporting – The days of the quarterly paper statement arriving 90 – 120 days after the quarter end that nobody ever looks at are over. Clients and family members want better access to information that is delivered in a way that they want, when they want it and a format that makes sense to them. Clients want easy access to information from their desktop and mobile devices. This is not just for the rising next generation. Baby Boomers are accessing information digitally as well. 57% of baby Boomers own a tablet (Nielsen) and 7 in 10 Americans over the age of 50 own a smart phone (AARP).

The consumerization of IT has changed how clients look at technology. Your clients experience user friendly apps that provide information to them in a seamless manner. They expect the same from their advisor. In addition to a better client experience, you also increase your chances for being able to serve the next generation as clients as they will use your technology (or lack thereof) in discussions and management of their parent’s wealth. There is a reason so few family offices survive the passing of the founder and most advisors do not end up taking on their client’s children as clients – technology is a part of this lack of client retention.

Thankfully technology has come a long way as well in this area. Responsive web design allows firm to build applications that can be rendered on both desktop and mobile devices. Business Intelligence tools can provide visual representations of complex financial information quickly and easily. This means partnering with vendors that invest in these technologies and it means keeping systems current to take advantage of technology that will deliver a better client experience.

In my next blog post, I will discuss the impact of emerging technologies such as AI, machine learning and block chain and how these technologies may impact firms.

For Part Two, click here.

For Part Three, click here.


*Risclarity is not affiliated with Datafaction.