3 minute read 2 Jan 2019
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Why wealth could be the next big service

Authors

Mike Lee

EY Global Wealth & Asset Management Leader

Spirited leader for wealth and asset management. Champion for change. Driven to produce better outcomes and simplify the complex. Passionate about family, friends and sports.

Mark Wightman

EY Asia-Pacific Wealth & Asset Management Advisory Leader

Leveraging technology and cultural change to drive the future of wealth and asset management. Global traveller with an Asia Pacific focus. Thought leader. Educator. Father.

3 minute read 2 Jan 2019

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Greater connectivity and hyper-personalization will see wealth management become as convenient and engaging as online shopping or social media.

It’s often said that wealth and asset management is changing faster than ever, and that the industry of the future will look very different to that of today. But what does that mean in practice? How will investors interact with advisors in 10 years’ time? How will they send and receive information? How will they make investment decisions? Will they talk to “real” people at all?

To try and answer some of those questions, let’s imagine that it’s 2030 – twelve years from now. Mike’s son, aged 12 today, is a 24-year-old university graduate video chatting with a friend in Europe. He calls out to his virtual assistant: “Can I afford a July trip to Paris?” The answer comes straight back: “No problem, if you’re happy to work one of those extra projects in April.”

That scenario is an example of wealth as a service in action. Wealth as a service will be:

  • Immediate and intuitive to use, offering a choice of communication channels (verbal, email, chat-bot, etc.) 
  • Automatically tailored to individuals’ needs and circumstances 
  • A filter sorting the bewildering investment universe into curated choices
  • Continually learning and improving 

Hold on – isn’t wealth and asset management already a service? Of course it is. But just as digitization has reshaped many industries, we think wealth as a service will see wealth management become as convenient and engaging as online shopping or social media: proactive, wholly personalized and giving investors everyday support that, almost unnoticed, becomes completely indispensable.

The essence of wealth as a service will be hyper-personalization, made possible by the application of AI to vast reserves of data.

The potential of hyper-personalization

The essence of wealth as a service will be hyper-personalization, made possible by the application of AI to vast reserves of data. That will include personal data such as geolocation, age, spending habits, tastes and preferences; and investment data such as education level, risk appetite and previous transactions. Integrated with market and other external data, this analysis will enable the hyper-personalization of both customer interactions and customer outcomes.

  • First, wealth as a service will be delivered through a fully digital intermediary. This might come in the form of a virtual assistant, or a digital avatar that represents each investor’s interests in the marketplace. Thanks to a range of data feeds, including sensors connected to the Internet of Things, this intermediary will have a unique understanding of its sole customer. And thanks to AI, it will have the power to conduct smart searches of the entire market on his or her behalf and learn from them.
  • Second, wealth as a service will provide each investor with totally personalized investment management. Today, only institutions or the ultra-high net worth enjoy customized investment portfolios. Other investors own a small share of pooled vehicles such as mutual funds. In time, technology-enabled operating efficiencies will allow asset managers to offer every investor continually tailored packages, managed by a combination of human and machine intelligence.
Wealth and asset managers have always aimed to meet investors’ goals. This is different – it’s about meeting needs proactively, based on new data insights, in a way that simplifies complexity.
Mike Lee
EY Global Wealth & Asset Management Leader

This kind of hyper-personalization may not be here yet. But it’s not a complete fantasy either, just an extension of ideas and concepts in development today. After all, we’re seeing global wealth managers cooperating with tech giants to explore the potential of virtual assistants and create AI-driven investment suggestions. Other firms are working with technology vendors on mapping client transactions to behavioral information, with the aim of enhancing segmentation and improving investor satisfaction.

Collaborating to compete

Contrary to what many might expect, we don’t think wealth as a service will be the result of technology specialists displacing today’s wealth and asset management firms. The disruption to existing processes will be driven by the technology and investment industries working together in partnership.

This doesn’t have to be about tech giants coming into the industry and taking over. Just look at how technology firms are already working with the asset management community – it’s getting quite exciting.
Mark I. Wightman
EY Asia-Pacific Wealth & Asset Management Advisory Leader

Technology companies will contribute their unrivalled capabilities in behavior analysis and user experiences, developing new approaches to segmentation and interaction that can deliver complete individualization. Wealth managers will draw on their expertise in financial advice, asset allocation and compliance, while asset managers take the lead in developing and managing tailored investment outcomes. In the process, the lines between wealth and asset managers – and between the investment industry and other sectors – will continue to blur.

In short, focusing on the areas where they excel will allow investment firms and technology specialists to collaborate to compete, instead of working in direct opposition.

Over time, the integration of investment, technology and behavioral expertise could help deliver wealth as a service in a simpler – more effective – way.

How do you get to next before next gets to you? Join EY to discuss how disruptive technologies will help businesses ride the next wave of future industry at MWC Barcelona 2019 – from 25 – 28 February. Join the debate using #NextWave, #BetterQuestions and #MWC19.

Summary

Wealth as a service will center around hyper-personalization delivered through a fully digital intermediary.

About this article

Authors

Mike Lee

EY Global Wealth & Asset Management Leader

Spirited leader for wealth and asset management. Champion for change. Driven to produce better outcomes and simplify the complex. Passionate about family, friends and sports.

Mark Wightman

EY Asia-Pacific Wealth & Asset Management Advisory Leader

Leveraging technology and cultural change to drive the future of wealth and asset management. Global traveller with an Asia Pacific focus. Thought leader. Educator. Father.