Tech trends in wealth management to watch in 2019

The wealth-management space has undergone massive transformation over the past few years thanks to technology, and advisors must look ahead to even more in 2019.

In a recent report, Capgemini outlined the top trends that wealth-management firms must keep track of as they move forward. Among the different themes they identified, technology continued to play a major role as a way to improve returns and otherwise create added value for investors and advisors alike.

The firm predicted that machine learning could play a bigger role in curtailing investors’ individual biases. While historical data is already being used in quantitative fund management and stock valuations, it fails to account for fundamental analysis and subjective, forward-looking views. Artificial intelligence makes it possible to analyze a broad range of data — including unstructured data such as communication between fund managers — and identify biases that anchor investment decisions under certain conditions.

“Wealth management firms’ profits will grow by reducing negative cognitive biases that affect investments and hurt margins,” the report said.

Continuing on the theme of data analysis, Capgemini said that wealth-management firms are beginning to study clients’ historical investing patterns, behaviours, and lifetime value. With that exploration, they can determine the best-fit products and service for clients, as well as find appropriate up-selling and cross-selling opportunities. Similarly, models to analyze client profiles, behaviours, transactions, and other forms of unstructured data are being developed to anticipate clients’ responses in specific situations.

Augmented reality (AR) and virtual reality (VR) were also seen to play increasingly important roles. Technologically advanced advisors can use virtual reality to visually educate clients about investment performance and the possible future impact of their investment decisions. And aside from creating a virtual trading experience for advisors to train through, AR and VR can be used to visualize massive data sets so that wealth managers can make informed decisions.

The report also saw opportunities to automate portfolio management thanks to the internet of things (IoT) and Big Data. Wealth managers that can get a glimpse into clients’ lifestyles through expenditure data, along with information that’s consolidated from connected devices with sensors, will be able to better personalize their services based on a clients’ needs and returns required by clients to maintain or improve their lifestyle.

Finally, the report predicted that firms would be able to better use virtual assistants and chatbots. That includes:

• Smart assistants that can understand customer queries;
• Whispering agents that can help salespersons in the mass affluent market with dialogue suggestions to delight and engage customers; and
• AI-based tools that can make recommendations for clients with varied tax situations, wealth-structuring preferences, and values.

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