How technology and a shift in culture will change the wealth management industry over the next decade

Tim Parker
Posted by Tim Parker
Posted on December 08, 2020 Leave a comment

No one can deny the impact technology has had on the world. It has revolutionised the way we communicate with each other globally, sparking movements and opening up discussions. Furthermore, it has created some incredible tools and resources to push whole industries into metamorphosis. Sectors that are used to working in an inefficient, archaic way have been forced to adapt and move with the times.

The financial industry, and more specifically the wealth industry, of which Akoni is a part of, is no different.

Over the last few years, the wealth sector has experienced a shift in the culture both amongst the community and in how they offer services due to technology. 

Because of this cultural shift, the financial industry has been able to improve a client’s experience and engagement, increase productivity and open up services and products to those who may not have had access before. Through the use of predictive technology such as AI and machine learning, the ability to automate certain functions, and through the rise of mobile applications, businesses can create and push out reactive solutions to local and global markets much faster than they were capable of doing over the past few decades.

At Akoni, we see that the wealth management industry is taking steps to position themselves firmly in the future of financial services. However, before we look to the future, it’s always inspiring to see where the industry started and to see how far we have come.

A (very) short history of wealth management

The wealth management industry is over 200 years old, and has generally operated under the same playbook. 

A high-touch model is generally used by wealth managers - visiting and speaking to clients face-to-face, creating these close relationships in-person. IFAs and wealth managers typically dealt with a very similar clientele - those who are privy to intergenerational wealth, and who are considered high net worth individuals (HNWI). 

According to the Boston Consulting Group (BCG), despite a significantly larger asset and client base in recent years, the industry’s profit pool remains the same as it was more than a decade ago, having reached just $135 billion in 2019 compared with $130 billion in 2007, pre the 2008 financial crisis.

Although interestingly, personal global wealth has continued to increase across all continents since the late 90s, up until the present day. Globally, in the late 90s, personal wealth stood at $80.5 trillion, today it stands at $226.4 trillion. (Total wealth was defined as private financial wealth consisting of cash and deposits; bonds, equities and investment fund shares; life insurance and pensions; and other small asset classes).

Although personal wealth has increased, the industry’s profit pool has remained the same, showing that there is a much wider market that can be tapped into - which is where technological-solutions come into play.

However, there are a lot of moving parts that need to be considered when modifying the wealth industry, including regulatory hurdles and changing attitudes when it comes down to interacting with current clients, and enticing new ones.

Many industry players today are still adhering to the same playbook, and are moving slowly to the new world of wealth management. If they do not catch up, they may lose out on revenue and clients, leaving them at a standstill, or worse, making a loss.

Covid as a catalyst for change

As we have mentioned in previous blogs, covid has been a catalyst for a cut in market interest rates across the board, rumours of negative rates circulating, and yet more cash being held onto by clients across the UK as the amount saved with average consumers increases.

According to the BCG: “While the speed of the recovery depends to a large extent on the success of public health measures, as well as on interventions from governments and central banks, the pandemic will almost certainly cause wealth to contract in the near term.”

Despite financial crises in 2008 and 2020, monumental global catastrophes (9/11), and now pandemics (covid-19), the wealth management industry has proven its resilience and continued to stay strong throughout. Although it may contract short-term, long-term, the future still looks bright as technology will help IFAs bring in new clients, allow them to diversify their portfolio, and in turn, bring in more revenue.

The future of wealth management

Design principles are now shaping experience, whether it’s a white-label solution for IFAs to take a digital wealth management service and make it look like their own, or IFAs working with a partner who allows them to create a platform where they can give their clients more control over how their cash is handled.

What a client expects to see from a digital offering - sleek, easy to understand and how quickly can they get from point A to point B - may seem like simple principles to live by, but for the industry, it is not that clear-cut. 

That’s why forward-thinking leaders in the industry have started to create a solution to fix this, and it’s up to the industry to adopt this new way of designing financial products and services to entice a whole new generation of clients.

The way we communicate will change too. As covid showed us, we can now do a lot of conversations digitally. However, we all know that this is still no replacement for in-person interactions. Nonetheless, the pool of people who are saving more and want more from their cash has increased greatly, and managing this new influx of clients will mean automating processes that are traditionally done manually, and creating new ways to digitally onboard clients (KYC, AML etc). 

Lastly, clients want tailored options to meet their specific needs. A technologically-powered platform that gives clients several options including environmental, social and corporate governance (ESG) choices, and can fit a client’s criteria automatically to the investment options, will give client’s more control. This is appealing to younger generations who are used to a more self-service, instant approach, vs the old-school ‘call your wealth manager and potentially wait a few days’ approach.

No one should fear change, and the same rings true for the wealth management industry. As uncomfortable as change may be, long-term, the benefits will far outweigh the strife of short-term transition and uncertainty, for both IFAs and ultimately, in the end, for their clients.

So, why should you choose Akoni to help you with your client’s cash decisions?

1) Safe and secure with the FSCS Government deposit guarantee

All deposits are held with each bank providing protection of up to £85,000 per bank, or up to £1 million for Temporary High balances.

2)  Diversifying risk (spreading money across savings providers)

With the option to spread cash across several providers on the Akoni Cash Management Platform, you can diversify risk, and increase the chances of positive returns.

2) Increased returns & Better interest rates

In a climate of economic uncertainty, and with interest rates being cut across many providers, it’s not easy to find decent interest rates in a simple way. With Akoni, you can find competitive interest rates to suit your client’s specific needs. 

4) Quicker, and hassle-free - no form filling

Akoni Hub provides a hassle-free cash management experience - your clients can onboard and open an account online with no fuss. Clients will only need to complete one AML/KYC process, can switch between providers, and manage their account on the Akoni Cash Management Platform in just a few clicks.

5) White label Adviser portal and tools 

You have the flexibility to create a platform that works for you and your clients. Add your branding to showcase who you are through a sleek, professional cash management platform designed with you in mind.

The award-winning Akoni Cash Management Platform is already leading the way in the wealth management sector, and has partnerships with Barclays, Aldermore, Investec, Clydesdale, amongst others. The ability to white label the platform gives IFAs flexibility to help their clients move cash depending on ever-changing macro and micro environmental factors.

Find out more about Akoni: Akoni is an award-winning UK cash platform, which provides a marketplace to financial advisors and wealth managers through a bespoke white label offering, or off-the-shelf offering. Akoni uses innovative technology to personalise cash planning solutions for clients, and also provides a full API solution to banks and insurance clients.

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