He explains: “2017 was a key changing point where technology and digital possibilities came to the fore. Before then the industry was knee-deep in ramifications stemming from the 2008 financial crisis; notably regulation in the form of RDR and MIFID 2. These were centre stage for many boards.”

He also points to margin pressure – a constant in the industry but prevalent around that time. This was, he says, not only due to the cost of regulation but also the need to have cost transparency as a result of the RDR and the need to change models significantly.

He comments: “It was about this time that the technology play started to emerge and has since become top of the agenda for the C-suite. The digitisation era is now well and truly upon us and over the next 10 years will continue to form a key facet of the day to day within wealth management. Everything that can be digitised will be digitised.”

Portfolio management
Firstly, he says, technology will have a significant impact on portfolio construction and management. “This has become subject to institutionalisation and centralisation as wealth managers realise is it no longer operationally efficient or in the best interest of clients’ returns to construct the portfolios themselves as well as doing the wealth planning,” he says.

Indeed, with the emergence of better systems to manage risk and allocate investment then this has become something of a no brainer. “There has been a lot of demand and technology solutions have made for a much better understanding of risk and how to build better portfolios,” he adds.

The second big technological enabler that technology brings is in allowing the adviser to be more efficient and scalable- by being able to manage more clients. This is very important in the context of people from all walks of life needing to take control of their own financial wellness but needing help to do it.

Indeed, oft cited figures point to only 3% of the UK’s adult population taking advice last year and some 30 million adults have never had any advice at all so there is a big need for the industry to reach out.

“Technology can help to fill the advice gap because it can take away all the paperwork and mundane things away from the adviser- thus freeing them up to actually deal with the client’s needs. This is essentially a scale issue and given that COVID-19 has shown people want to get their finances in order this is a welcome agility that technology can give to advisers to democratise advice and make it more broadly available,” Parkin says.

Linked to this is the capability that robo advice can bring. It also helps with the democratisation play in that it brings the entry level to investment down and thus promotes financial inclusion. “Financial health is so important and sits right along physical and mental health, so it is vital that the financial industry finds a way to connect with as many people as possible. Robos raise the possibility from dealing with hundreds of clients to millions,” he states.

Operational efficiency
The final piece of the technology puzzle lies in operational efficiency and the way in which technology can help firms to move from relying on old legacy back office systems and spreadsheets to modern processes. This is especially important when it comes to data handling and processing and how robust the processes around data are.

Happily, says, Parkin, the UK is a very vibrant environment to be in and so wealth managers here are exceptionally well placed to find the tools they need to up the ante and find the solution that they need and better service clients as a result.

He says that one positive effect of COVID-19 is that there is a new collaborative ethos and attitude. Now what needs to happen is that people engage but here too the signs are encouraging.

Indeed, he says that since lockdown there have been four times as many sign ups to platforms. “This is a clear indication that people are minded to become involved in their finances and help themselves. The industry thought people would actually run to the hills and in fact the reverse has happened and so an indirect positive of COVID-19 is that people have engaged with the tools they need to be in control of their own financial wellness and destiny. This is a huge positive,” he says.

“The industry has a long way to go however and the impact of COVID-19 has revealed this as well as just how far we have come,” he says.

However, he adds that the impact of COVID-19 will be a real hit on people’s financial wellbeing; people are going to lose their jobs and that there will be an impact on the economy from that.

“The finance industry has the technological solutions to help people to get a grip on their finances and to better manage them and make the transition to be savers and investors. We can and should use technology to actively help people to help themselves,” he says.

Roundup technology in particular could be something interesting. In the past many saving concepts were based on the concept of forgoing something but roundup technology means when you spend on say a coffee your bank account rounds up that amount to say the nearest pound and syphons it off. It can also be gamified, and we think that on average people can make savings around the one thousand mark per year.

Sustainability has also come to the fore over the past 18 months and this is also something that will bring people in when it comes to what they do not want to be involved in financially in much the same way that there is a lot of vegan uptake and people no longer use plastics. The gap between the everyday and sustainable investment will be closed.

COVID-19 has seen the industry leap forward 6 years in 6 months and we can never go back and nor should we. Face to face meetings can now largely be done remotely and the digital world is here to stay. Account opening has gone paperless and wet signatures are largely a thing of the past. The handful of firms that were truly digital have done well, some had certain things in place but weren’t really using them and they have had to bring them into the everyday quickly. For those that were laggards they have had a sharp shock but for all the realisation is that without digital tools they cannot be successful is very real.

Click here to access the full UK WealthTech Landscape Report 2020.