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 July newsletter, we highlight five notable themes. 

The fiduciary standard bandwagon is coming, regardless
We highlight below the launch of Merrill Lynch’s new Fiduciary Dashboard for advisers. This is a practice management tool to help its advisers serve their clients in a fiduciary manner. Of course, some might see it as redundant given that the regulation to enforce a fiduciary standard on the industry in the United States is currently stuck in deep mud. However, similar to other regulatory drivers like the Retail Distribution Review in the UK, MiFID II in Europe and the Future of Financial Advice in Australia, these regulations highlight an undercurrent of change and their implementation (or not as in the US for the moment) can almost be considered irrelevant. Change is here and, at some point, the regulation will follow. Merrill Lynch likely sees this too (though it has also spent big on this fiduciary bet).

From a non-US perspective, the trend towards RDR-style regulations is clear. Even where rules like do not yet exist, firms are adopting practices that would fit under such a regulatory environment. And it is not because they want the extra cost burden added to their business. It is because, like Merrill Lynch, they recognise the direction of the tide and want to sail with it, not against it. Get in early, be progressive, adopt leading international standards and, dare we say it, put the client more firmly in the picture (which, if you look at the Merrill Lynch toolkit, also has clear benefits for the advisor and business).

Technology is raising the investment game
The examples where technology is enhancing the investment capabilities and propositions of the wealth management sector are growing in number. This is a very good thing for the sector. We can talk about new capabilities like Artificial Intelligence and Big Data all we like but what matters is where these tools are pointed and what outcomes they deliver. The rest is tech babble and hot air. In and around the wealth management sector now, we are increasingly seeing new tools like AllocateRite and LifeYield both included this month, where wealth management is experiencing a necessary and welcome upgrade in the sophistication and potential positive outcomes of the tools available to the sector. For clients, advisors and enterprises, we are entering into a new era of investment management sophistication with technology tools such as these at its heart.

Client understanding and engagement tools are moving up a notch
Similar to the sophistication we are seeing around the investment management piece, technology is also delivering a new era of enhanced capabilities in areas such as client understanding and engagement. There are many different developments and solutions we can highlight here but, this month, the newsletter includes new client prospecting solution called Smart Insights from Broadridge in the United States, and also highlights the adoption by a wealth management firm in Canada called Carte Wealth of a content management system called DigitalReach from a firm called BlueRush.

Like in a game of football (US football or English football – and you know who’s got that right!), it is the direction of the pass we care about in this newsletter, not the quality of the pass. So, when we spot news on new offerings and adoption like these, our first thought is about the direction of travel for the industry. What is clear to us is that we see the quantity of solutions with a client understanding and engagement element increasing, we also see the breadth of their capabilities increasing and we also see their success in winning wealth management clients in this marketplace growing. And this trend will continue.

And clients are engaging with digital tools and resources to support their needs
When you consider the arrival of tools such as those highlighted above and throughout digital marketplace, they are adding skills and increased sophistication to the sector. This is a must if the sector is to retain, never mind grow, its relevance. Consider the highlighted research from exchange-traded fund company Global X Funds. According to their research, advised clients (i.e. those using some form of wealth manager) are more likely to use both technology gadgets and social media for their investment research and knowledge needs. What does that mean? It means for wealth managers to play with its existing client base, it has to engage with those same and better tools to be relevant. Otherwise, those clients might go looking down the road to a competitor that is technology-enabled and able to keep up with their new tools.

However, if the survey from Hartford Funds is a fair reflection of the market, the majority of advisers still strongly prefer face-to-face meetings with clients. Digital options are far less in favour. This is not necessarily a bad thing but, as time goes by, more than likely there will need to be a shift to at least a far greater degree of flexibility as to how meetings are conducted.

Free, cheap and accessible
Finally, we want to briefly touch on the growing trend for free/freemium services in the market, as highlighted by Oranj’s MAX solution, the clear need for cost efficient (cheap) solutions, as highlighted by the growth of the InStrategy TAMP from Rowling & Associates, and the clear rise in desire and need for accessible solutions, as highlighted by the partnership between additiv and Orange Business Services to deliver cloud-based digital wealth management as-a-service products.

You can access the full newsletter for the month here: https://www.thewealthmosaic.com/resources/insights/twm-wealth-technology-market-highlights-july-2018/