Every month from our Wealth & Technology newsletter which covers bewteen 60 and 90 relevant news and developments from in and around the world of technology in the wealth management sector, we also pick out a few themes to highlight and summarise. From the June newsletter, we highlight three notable themes.
The robo advisor/digital wealth movement continues to take shape
First rejection, then fear, then acceptance, then engagement, that is how the wealth management sector has dealt with the competitive arrival of robo advisory, or digital wealth, propositions. However you view this theme, developments in the market continue in multiple forms, as the news flow from June highlights. In the US, both TD Ameritrade (with the launch of Personalized Portfolios) and U.S. Bancorp (with the launch of Automated Investor with the support of FutureAdvisor) highlighted how traditional players continue to enter the space in response to both investor appetite and need as well as market opportunity.
Also in the US, SigFig, one of the players seeking to support the new digital needs of the traditional market raised a further US$50 million in funding to support its development. However, while it is the lead market, the US is not the only place where things are happening. To highlight how the appetite for these new tools is also strong elsewhere, in the UK Munnypot received investment backing from Capita and new player Multiply AI (which is still to launch) raised GB£1.75 million, while in Asia three players received further cash support, China-based platform provider PINTECH raised US$103 million, Hong Kong-headquartered B2B player Quantifeed closed a US$10 million raise and Singapore-based WeInvest raised a total of SG$16.5 million. We should also mention the acquisition of UK-based rplan by US-headquartered InvestCloud. Again, this is very much focused in enabling the digital wealth plays of the institutional asset management space, taking note of Vanguard’s success.
Finally, just to highlight that not everything is perfect in their world (including ongoing question marks about their traction among clients) Betterment was fined for US$400,000 for compliance failings to show that these firms are not always so different to their incumbent competition when it comes to some market failings.
Funding, funding, funding
In addition to the above highlighted fund raisings, investor appetite to provide financial support to technologies in and around the wealth management sector continues. In the UK, start-up Advicefront raised GB£1.3 million to support the development of its product set for UK advisory firms, while in the US, digital client lead generation firm SmartAsset raised US$51 million in a series C. Additionally, Edinburgh-headquartered wrap platform Nucleus announced plans to list on AIM, the funds from which will surely be used to support its product and market development in the growing retail advised platform market.
Artificial intelligence achieves wide acceptance
Research from Forbes Insights and Temenos found that 34% of firms are currently implementing AI technology, another 25% are trialling it and 99% are planning to use this technology within the next three years. Whatever it is, how it works and what it can be used for, it seems that the market is increasingly comfortable that AI has role to play in the sector’s future technological infrastructure. Additionally, the same research found that the sector’s HNW clients are equally optimistic about AI with 84% accepting of it as a means of investing and 67% believing their wealth managers should be adopting it now. This client view is supported, somewhat, by research from Merrill Edge in the US which engaged with 1,000 mass affluent individuals in the US. This found that almost 40% are comfortable using artificial intelligence for financial advice and, across all age groups, 20% prefer digital advice over human.
However, looking at AI from a more negative perspective, research from Paris, France-based Linedata among asset managers found that firms also fear disintermediation through new technologies like AI, as well as the applications that are increasingly using them like robo advisors and ETFs. The new importance and relevance of AI is highlighted by moves among solution providers, however. In China, Ant Financial is making its full stack of AI capabilities available to the country’s asset management firms, while elsewhere Bloomberg launched a new price forecasting application for investment professionals in collaboration with Japanese AI player AlpacaJapan and Envestnet | Yodlee launched AI FinCheck, a new AI-driven virtual Financial Wellness assistant for the financial services marketplace. Whichever way you look, these developments will heat up and become far more commonplace.
You can access the full newsletter for the month here: https://www.thewealthmosaic.com/resources/insights/wealth-technology-market-highlights-for-june-2018/
