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Advisory and Private Client Wealthtech Wrap-up 2021

Diana Chornobryvets
Advisory and Private Client Wealthtech Wrap-up 2021

The Wealthtech landscape in 2021 saw new and existing innovations and technologies continue to develop, not least in response to the continuing impacts of the coronavirus pandemic. Private client solutions providers continued to invest in and innovate on artificial intelligence, self-service options, and digital assets, among many other things. 

Let’s wrap up wealthtech in 2021.

Top wealthtech trends in 2021 impacting private clients

Paperless Onboarding

The importance of client onboarding to a good client experience has made it a priority for wealthtech companies. And with the pandemic bringing to an end face-to-face meetings and prolonged office closures, the relevance of paperless onboarding has increased.

2021 saw firms investing in paperless, or digital, onboarding, which includes identity authentication, data capture, document archival, and digital signatures among other things. 

Self-service

The relationship between advisors and clients is central to wealth management. While some high-net-worth individuals (HNWIs) prefer the traditional way of interacting with their wealth manager, more and more private clients start to gravitate toward more of a DIY approach—such as accessing self-service options through digital channels.

This includes instantaneous generation of reports, digital signing of documents, the addition of documents and updating identity and other information. 

Hybrid advice

In 2021, HNWI clients increasingly found value in “hybrid advice”, a term for the combination of automated and human advisory services. Hybrid advice is a best-of-both worlds solution that allows clients to handle certain tasks themselves while maintaining a personal relationship with their human advisor. 

Quoted in Finextra’s The Future of Wealth Management 2022, Kyle-Langley, Executive Director at private bank Coutts, highlighted the importance of hybrid advice:

“The personal element is giving clients a range of channels so they can decide how they interact with us. The quarterly face-to-face meetings with lots of printouts to discuss, start to look a bit silly in a more video-enabled communications world. Clients are perfectly happy to have those regular check-ins remotely.”

Artificial intelligence

Artificial intelligence continued to grow, tentatively, in popularity in the wealth management space in 2021. As PWC points out, wealth management and AI are a good fit: Wealth managers hold a lot of data and can put AI to many uses, such as forecasting, informing investment decisions (taking out the “emotion factor”), cutting costs (for example in terms of anomaly detection), and analyzing client actions, interests, and risk profiles.

​​This point is emphasized by Squirro, which claims that “99% of all data collected is never used. This data is siloed in different internal and external systems, often in unstructured (textual) form and fast-changing.” AI is one way to maximize the value of data.

PWC’s research shows that in 2021, 73 percent of asset and wealth management firms (AWMs) were aware of the benefits of AI, while 22 percent were not but are expected to within the next two years. Meanwhile, there was a roughly 50-50 split among AWMs in recognizing the benefit of AI in increasing revenue.

Cybersecurity 

Typically, we would not count cybersecurity as a “trend” per se because, as we see it, there is no wealthtech without cybersecurity. However, in 2021, the focus on digital as a result of the COVID-19 pandemic, as well as a continued increase in interconnectedness through API integrations and shift to cloud delivery, saw firms double down on solutions. Multi-factor authentication, private cloud data storages, limited accesses and data encryption, and key vault usage were all to the fore in 2021. 

Hyper-personalization 

In 2021, the level of satisfaction of HNWIs with their wealth management firm’s personalization offerings continued its upward trajectory, growing from 40% satisfied to 49% satisfied. It seems certain that more than half of HNWIs will count themselves among the satisfied in 2022 if the industry continues to deliver on its personalization promises.  

Investments in technology, such as AI, advanced analytics, and alternative data have enabled deeper and more valuable personalization of financial services. 

Advicetech crystallized as an industry

An offshoot of Wealthtech that focuses on the technologies used by the wealth managers to serve their clients, called “Advicetech”, crystallized as a distinct industry in 2021. The coming years promise innovation in how wealth management advice is delivered.

We have written about the three golden rules of Advicetech here

Account Aggregation

Having the single view of all assets remains a challenge, and although fundamental to proper service, there is more work to be done across all types of firms offering services to private clients. Things are moving beyond that basic need, however. For example, Credit Suisse is using Canopy to enable this holistic view of assets across multi-banked clients.

Digital Assets

Digital assets (NFTs, stablecoins, cryptocurrencies) continue to generate interest from HNWIs, and wealthtech firms are providing the infrastructure to enable this.

“We are convinced that the tokenization of real assets is the future of investment,” said Lamine Brahimi, co-founder at Taurus Group, one of the innovators active in this space. 

Conclusion 

It’s probably fair to say that 2021 was a good year for Wealthtech, if not a landmark one. Many, or all, of the trends that were relevant in 2020 remained so in 2021, even as the world adjusted to working and living in pandemic conditions. And companies will continue to refine their offerings and test new ideas.

One thing is for sure: 2022 will be a big year for Topaz. All of these wealthtech innovations need to sit behind a single, experience-first user interface, so clients see a joined-up, consistent and high-quality experience from their trusted service provider.  Find out how an experience-first approach to HNWI service delivery can drive loyalty and grow revenue.