research & insights from The Wealth Mosaic

Wealth & Technology Newsletter: 4 market themes highlighted from August 2018

Looking at specific market themes from the month of August 2018

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Wealth & Technology Newsletter

Fitting with our overall aim of delivering dedicated knowledge and support resources around the business of needs of the wealth management sector, our monthly Wealth & Tech Newsletter looks at a broad range of the latest wealth management technology-related developments from across the wealth management sector and then consolidates them...

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by The Wealth Mosaic
| 30/10/2018 06:00:00

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 robo rumbles continue
A few new robo launches happened or where announced in August. Major news stateside as the country’s largest bank, JP Morgan Chase, launched its new digital investing service called You Invest. This offering also threw the cat among the pigeons by bundling in free or discounted trades. In the UK, Leeds -headquartered national advice firm LEBC announced plans to offer robo-advice to individual clients, while US-based Islamic robo Wahed Invest launched in the UK. In Asia, Singapore-headquartered OCBC Bank launched a new robo investing tool called RoboInvest with the support of solution provider WeInvest.

Additionally, in the B2B arena, Singapore-based Bambu partnered with US-based DriveWealth to go after the advisory market in the US with white-labelled advisory software. Further, UBS announced its plans to shut down its UK digital wealth management service, UBS SmartWealth and, as part of that process, the Swiss bank sold the intellectual property rights to its San Francisco-based digital wealth partner SigFig.

In the same month, seeing JP Morgan and OCBC enter the robo / digital wealth space and UBS exit (though its deal with, and investment in SigFig, raises more questions than answers) shows both the clear desire to go the robo route and the challenges in so doing with any degree of success. But in seeing OCBC working with WeInvest, UBS selling its IP to SigFig and Bambu and DriveWealth coming together, the marketplace is clearly maturing and seeing the B2B as more aligned with its needs and skills.

Deals show the value of content in engagement
Two deals in the US this month proved the importance for content and content distribution for the advisory industry. Firstly, Carson Group bought digital marketing technology firm Mineral Interactive, while FMG Suite bought Platinum Advisor Strategies. This a developing area with numerous tech-led tech-enabled players now active in helping wealth manager reach, engage and retain their market audience.

Wealth managers are not ready or equipped for change
But, despite new technologies like those that support an automated and personalised content capacity, firms according to recent study done but Alpha FMC of 15 UK-based firms While 40% identified ‘digital as one of their top priorities’, 46% felt they were only ‘just getting organised’ and 60% said they allocate less than 10% of all spend to digital initiatives. There is clearly much to do but whether today’s leaders are equipped to lead in the digital area also remains open to question as Orbium pointed out recently.

The outside influence and impact on wealth continues
It is always very difficult to justify making statements that see the world in black and white. Of course, it is the grey in the middle that dominates most topics and events. As an analyst focused on the wealth management sector, however, I tend to feel the sector has moved from one extreme to another, where once it set its own course with little care for what happened outside the sector, whereas today the sector is increasingly influenced by external events and actors. In reality, that outside influence has always been there, but it feels far more evident, powerful and influential now. Three examples highlighted this to me through August: (1) personal finance app Mint readying a new feature called MintSights to provide personalized financial recommendations to its more than 20 million users, (2) UBS applying recommendation algorithms similar to those used by Netflix and Spotify to propose trades to its clients and (3) the UK’s wealth management trade body, PIMFA, partnering with Financial Crime Intelligence to launch an intelligence sharing platform for its wealth management members.

None of these developments is necessarily earth shattering but each is interesting in its own right and highlights the increasing influence of trends and developments that started well outside of the wealth management sector but that now clearly influence and demand change within the sector. Mint providing financial advice? Netflix influencing UBS’ engagement with clients? PIMFA building products to combat cyber threats? If I think back just a handful of years, these types of developments either did not happen at all or they did not happen with the scale and frequency that they occur now.

The sector is becoming familiar with the speed of change. It also needs to become familiar with the diverse origins of change. It is far from being the sole captain of its own destiny now.

You can view the full newsletter for August 2018 here.