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OCT 26, 2022

Change in Private Wealth Management

Alexander Cassar

Chief Business Development Officer

Reading time: 2 min


Markets are changing

Wealth has seen exponential growth in the last 10 years. The value has been created to such proportions that this shifted the boundaries of population segments determined by incomes and assets; what was once ultra-high is now just high and what in the twentieth century was HNW is now called mass affluent.

Social demographic composition of these segments has changed just as well; what was old-aged is now middle-aged as those who retired in their late 50s or early 60s are now middle-aged people who still make decisions, use tools and go online, they have tablets and laptops and are very active in the investment market.

Also, they are already passing their wealth to the next generation and creating a big wealth transfer to the next, digitally native generation who does not only need digital interactions but shows a different attitude to wealth, where and how it should be invested and the responsibilities around investments.

WealthTech is changing

With so many new types of players on the market, WealthTech vendors must be able to have separate distinct offerings for different institutions. This is addressed by the proliferation of intermediary ‘platform’ businesses which package outsourced technology with a financial product ‘shelf’ and often with fully outsourced operations. This way, a multitude of smaller independent wealth managers can afford modern solutions on the shared platform without the cost of individual local deployment.

This ‘3B’ model, B2B2B2C, is increasingly popular and creates value for each level of the chain. The end result is widest distribution at optimised, shared low cost.

WealthTech’s changing role in the sector

Another direction WealthTech is evolving towards is the two-way relationship with the client industry of private banks and wealth management firms. With the explosive evolution of technology, FinTech providers, and WealthTech in particular, are going beyond responsive support and starting to drive change at the client organisation.

By providing previously impossible capabilities, modern solutions are pushing the envelope of business innovation, enabling new operating and business models, new products and services in a proactive mode.

Making Strategic Choices

The basic premise behind WealthTech providers making a strategic choice is the debate between specialisation and the universal service or product offering.

One is specialisation, where the vendor can choose to focus on its greatest strength and point solution, as these are commonly known in our industry, with a specific subject having a specific service and capability.

Alternatively, a vendor can aim to cover the entire front-to-back spectrum of wealth management, that is having a solution that satisfies all the possible needs of a client institution.

There is no right or wrong as WealthTech vendors must make these choices firmly and radically to drive their Go-To-Market strategy for the next three to five and more years.

Other strategic choices include the way the architecture is designed, and how the technology strategy is formulated: best-of-breed or one shop and there is a good reason for each of those.

To discover more on the latest change in private wealth management access the full paper!