Introduction

This overview is designed to provide a short overview of the global WealthTech and specifically AdvisorTech landscape, from the private banking led models of Singapore, HK, UAE and Switzerland, to the mass affluent led models of more populous jurisdictions, such as the United States, Canada, UK, Japan or Australia.

The Wealth Management or WealthTech landscape is a fascinating collection of different tools that support all parts of the ecosystem, though there are broadly two business models.

Advisor based models.

These models started with service and support for the wealthy, those with sufficient assets to make a relationship with an advisor economically viable. Over time, technology has changed the entry level asset requirement significantly, with many firms offering a digital / robo advisory capability to be able to capture asset poor customers right from the start of their career.

Terms vary by jurisdiction, but most advised models tend to divide into 4 areas.

• For the truly successful, there is the ultra high net worth family office model, family offices either single (if you, say, founded a software company in the 80s) or multi-family to share the cost base over more assets. Basically BYO advisors / allocators.
• A private banking model again for those with the cash and who like to use summer or winter as a verb
• The bank/insurance/financial services led model, aimed at those with significant assets and who are lucrative lifelong customers across both their lending and investment requirements
• The RIA industry (similar to IFA in the UK market), for the same type of mass affluence but in much smaller firms with greater independence of investment approach, tech stack, focus.

It is worth noting that the private banking model is much less prevalent in the United States where family offices, foundations and endowments have been more popular. The PB model is dominant, as I noted, in many smaller jurisdictions that have opted to build significant industries around “offshore” wealth management.

For those wanting to visualize the WealthTech space, with a US tilt, Kitces provides an excellent series of ecosystem maps that give you a nerd’s eye view (their term…).

Digital / online models.

Over time, discount brokerages appeared, offering cheaper market access without advice, services were provided “execution-only”. These models appeared at scale in the 90s and have grown in number and sophistication as digital capabilities matured. Today the largest of these players operate at enormous scale, Charles Schwab, for example, having just under $12 Trillion in customer assets.

These models span the full array of customer affluence, with robo-advisory acting as a low margin feeder mechanism for customers with limited assets, through to digital solutions that please the most discerning high or ultra net worth individuals.

We will focus on digital and online capabilities in a later piece.

WealthTech: an industry in flux

Product availability: Cambrian explosion

From a product model once limited to cash management, mutual funds, derivatives, margin lending and individual equities, the industry now offers broad exposure to almost all public and private markets, as well as delivering enormous innovation in the burgeoning “direct indexing” space, a clever model that offers index performance but with accrued tax losses, improving after tax returns (“tax alpha”).

Beyond this entire new array of private assets: PE, Private Credit, Infrastructure and so on, many larger accounts offer a variety of structured products, they might have a tax focus, provide capital protection or simply offer leverage. Increasingly, there will also be digital or crypto assets. Clearly, there is now a product and an asset class for every customer and every risk tolerance.

Advisor desktop: talkin’ bout a revolution (in productivity)

Not long ago, Advisors got by with a CRM, a market data terminal, compliance platforms and some type of back-office interface for customer holdings and performance reporting. As “must have” WealthTech systems proliferated, the term “toggle tax” appeared to highlight the time advisors were forced to spend toggling between their different systems and monitors. A shoutout to former colleague, Sune Mortensen, this is a good summary of the issue.

Today, there isn’t even consensus on the future of the advisor tech stack, everyone wants to be in the mix, as the critical platform or operating system.

There can be only one…single platform

Hyper-Personalization:

With the advent of AI, wealth managers can now provide a degree of specificity to each client’s needs that was impossible from an advisor. The sheer number of customers and relevant data points (risk tolerance, ESG preferences, age, health, income, net worth, dependents, current portfolio and so on) meant that only a limited number of prestige customers could expect that degree of personalization.

Gone are the days the client would wait, listening to the sound of rustling paperwork, while the advisor found the right piece of information, this is an area that new systems are providing enormous benefit to both advisor and customer, and similar benefits accrue to those using digital/online solutions. Today, AI allows all of this information to be considered, in an instant, before providing a tailored solution for every customer. What was once the work of an advisor or planner has become a simple system output.

The nirvana state is for WealthTech to provide the advisor with a “next best action” allowing the system to quickly determine the right addition to the product mix, best product to sell, time to take tax losses, etc. EY notes in this useful piece that NBA remains more aspirational than current capabilities, though there is a huge amount of sizzle in this area (just not yet a lot of sausage). Or, if you like a good Texan analogy (as I do after a season of Landman), the area remains all hat and no cattle.

What next for WealthTech?

It seems clear that the platform wars will rage on, with a number of different scale players offering end-to-end capabilities for the advisor. The TAM for the Wealth industry is enormous so it is likely a series of winners will emerge, perhaps a few each for mass affluent / wire house / scale players, another for RIAs and a third for European and Asian Private Banking.

Given the events at Davos this week, it seems fitting to share this WEF report (citing Deloitte) saying 80% of retail wealth will rely on AI tools and advice by 2028. Unlike institutional roles, the wealth advisor will see almost instant benefits from AI, in document upload and onboarding, in note taking and compliance, in next-best-action and the improved ability to personalize advice. A

All of this is a huge benefit to an industry that has operated with meaningful barriers to scaling customers. In the same way digital banking changed the paradigm from x tellers per y customers, AI will at least act as a force multiplier as WealthTech allows workflows to be automated and digitalized.

Eventually, one could imagine the AI noting the inbound customer query, interpreting it, writing a draft reply pulling data (via MCP) from numerous platforms, then asking the advisor if they’d like to edit or send it. Human in the loop but, compared to 10 years ago, literally augmented with super powers.

Partnerships, ecosystems, cyber.

To date, none of these trends of integration and on-demand connectivity have driven a notable personal data breach, I do wonder how much of that is luck v skill. As this connectivity becomes the norm, the target appears so obviously lucrative that a breach feels inevitable. I hope I am just being pessimistic.

Looking from on-high, it is difficult to pick winners at this early stage. What is almost certain is a huge focus on partnerships and integration capabilities as every vendor wants to offer an ecosystem solution that meets their customers’ bespoke requirements.

The AdvisorTech landscape is at least one of the epicenters of AI innovation, with new capabilities and platforms proliferating. One must feel sympathy for the Wealth Management firms navigating this space, their management or procurement teams attempting to maintain ‘strategic partnerships and ‘key vendors’ with dozens of new offerings appearing on the horizon.

For Founders and startup CEOs, that creates a significant challenge, how do you create brand recognition and differentiation in a cluttered battlescape? How do you get the key partnership with a strategic vendor that signals your WealthTech credibility?

For larger firms, how do you allocate your constrained partnership bandwidth for areas that really add value to your core platform and narrative? Product strategy in this market is not for the faint hearted but the prize, when one looks at the TAM, is immense.

We shall keep watching…