Forecasting The Next Two Decades Of Wealthtech

Iskowitz, Welsh And Wakeman Describe How Wealthtech Has Shaped The Industry And How It Will Reshape It In The Long Term

Joel Bruckenstein, President, Technology Tools for Today
Joel Bruckenstein, President, Technology Tools for Today

For more than two decades, I’ve worked at the forefront of technology for wealth management and financial advisors. Having this front row seat has allowed me to observe numerous fintech advances and how the constant stream of innovations have streamlined and enhanced the way advisors, professionals and staff serve their clients.

Without a doubt, the average advisor’s clients are much better off today, with better portfolio design and management, a clearer picture of retirement and other big life goals, increased communication and specialized advice in the form of tax-smart strategies, loan and liability optimization, estate planning, risk management and much more.

For all the advances in our industry, we’re just getting started. To mark the 20th anniversary of Technology Tools for Today (T3) and our upcoming financial advisor technology conference from Jan. 22 to 25 in Las Vegas, I asked some of the leading minds in wealthtech to share their vision for the next two decades: Kendrick Wakeman, Co-Founder and CEO of WealthTech Strategy Partners; Craig Iskowitz, Founder and CEO of Ezra Group; and Tim Welsh, President of Nexus Strategy.

I asked each of them: How has technology improved the way financial services firms have been able to serve advisors and their clients over the years? How do you see this continuing to unfold through the next two decades?

Their answers follow.

Craig Iskowitz, Founder And CEO, Ezra Group

Craig Iskowitz, Founder & CEO, Ezra Group
Craig Iskowitz, Founder & CEO, Ezra Group

Marc Andreessen famously said, “Software is eating the world.”

Software is also eating the wealth management industry, but many advisors don’t know it yet.  Almost every part of the client life cycle has been automated, from marketing to onboarding, from proposal generation to portfolio management and reporting. Overall efficiency and productivity have skyrocketed as manual work and errors have been reduced.

But automation has also begun to squeeze advisors out of their traditional tasks. Successful advisors have seen the writing on the wall and started to move up the value chain away from building client portfolios and toward building client relationships.

The Kitces/Ezra Group Advisortech Map has seen an explosion of new products in two categories: specialized planning and advice engagement. Innovative software startups are filling these niches to help advisors differentiate themselves in areas such as planning for tax, Medicare and education. Applications such as Asset-Map, Pulse360 and Lumiant enable advisors to punch above their weight class and deliver higher touch communication and services while saving time and effort.

Within the next five years, next best actions powered by machine learning and big data will revolutionize the advisory business by generating a list of daily tasks for each advisor that has been optimized through targeted recommendations, which will move forward in a continuous feedback loop.

Those advisors who can adjust and ride the wave of this new technology era will thrive. Those who can’t adjust will be slowly eaten by the very software designed to help them.

Tim Welsh, President, Nexus Strategy

Tim Welsh, President, Nexus Strategy
Tim Welsh, President, Nexus Strategy

In a nutshell, technology has enabled advisors to make better financial planning and investing decisions for their clients.

The availability of real-time information and computational horsepower vastly simplifies and quickens the ability for advisors to synthesize more variables into actionable recommendations that help clients feel more confident and in control for achieving their long-term goals.

The T3 Conference has been the one constant in the ever-changing advisor technology landscape that remains the one venue to learn about the latest enhancements and trends, network with leading advisors and technology executives, while soaking in the latest innovations. By gathering the industry together, it creates a powerful network effect building upon the community of technologists, advisors and consultants to forge and accelerate that innovation.

Going forward, the continued success, growth and momentum of independent advisors will continue to attract attention and investment from both inside and outside of the industry. These increased investments will continue to drive innovation and change, further accelerating the growth of fiduciary advice, as well as increasing the total addressable market as productivity gains will enable advisors to profitably serve more investors, regardless of asset size.

Additionally, these investments will translate into new and better solutions for the independent space, further attracting advisors to break away from legacy institutions to access this innovation.

Kendrick Wakeman, Co-Founder And CEO, WealthTech Strategy Partners

Kendrick Wakeman, Co-Founder & CEO, WealthTech Strategy Partners
Kendrick Wakeman, Co-Founder & CEO, WealthTech Strategy Partners

Traditionally, wealth management had been largely a manual process that made it difficult to grow beyond a certain number of clients given the limited number of hours in the day. But over the last 20 years, savvy advisors have been able to use technology to automate and digitize much of the “magic mile” that starts with onboarding, through proposal and implementation, to monitoring. This has scaled out their workday and allowed advisors to focus on servicing more clients in the same number of hours while also shifting their workload from busy work to advice and expertise.

While there is still more work to be done honing efficiencies with technology, today savvy advisors are seeking to differentiate themselves by transforming their practice from “portfolio management” to “financial guru.” The portfolio management process has been scaled and will continue to be scaled by things such as model portfolios, automated rebalancing, tax-loss-harvesting and direct indexing.

Going forward, we believe we will see the continued development of ancillary services such as financial planning, liability optimization, tax preparation, estate planning, charitable giving, private assets, insurance, banking and anything else financial. Ordinarily, that sort of workload would choke an advisor, but systems have been developed and will continue to be developed that allow the advisor to provide these services at scale without much additional workload. The advisor will be center stage for a client’s entire financial life.

Joel Bruckenstein is President of Technology Tools for Today and Producer of the T3 Technology Conference.

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