AI, blockchain technology to push the wealth management software market to new heights eventually

AI, blockchain technology to push the wealth management software market to new heights … eventually.

December 8, 2022 3:51 PM

As the wealth management business increasingly becomes a technology business, the wealthtech market is poised for substantial growth and expansion behind the momentum of cutting-edge tech.

But we'll have to wait a few more years to see it hit its peak.

A report from Grand View Research predicts that the global wealth management software market will reach $12.07 billion by 2030, growing at a compound annual rate of 13.9% over the next eight years.

The California-based research firm's 159-page analysis expects the market growth to be driven by an "increasing demand for wealth management software from financial advisors to effectively understand the needs of their clients and streamline the financial management of their clients accordingly."

Researchers say the widening scope of wealth management software to cover everything from accounting and investment management to estate planning and retirement planning bodes well for the future. At the same time, rapid advances combined with greater adoption of the latest technologies for wealth management are expected to intensify the competition between traditional and non-traditional firms.

"The growing number of small and medium enterprises across the globe, and subsequently, the growing preference of these enterprises for modern solutions based on the latest technologies, such as blockchain and AI, are expected to create new growth opportunities for the (small and medium enterprises) segment," said a statement from Grand View Research. "Financial advisors are widely adopting financial advice and management solutions to increase productivity, improve workflow efficiency and strengthen client relationships by helping clients in attaining their financial and investment goals."

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According to the study, the trading and exchange firms end-use segment is expected to witness the fastest growth over the forecast period as individuals are aggressively opting for forex and equity trading to augment their financial gains.

The growing adoption of wealth management solutions by trading and exchange firms to optimize efficiency and reduce operating expenses is also considered a positive for the segment.

When discussing the rise in wealth managers turning to AI-backed applications to offer personalized solutions to their clients, researchers say businesses are particularly adopting predictive analytics tools based on AI and machine learning to analyze the large volumes of data related to investments and forecast future trends.

"The increasing number of high net work individuals across the globe is expected to play a niche role in driving product adoption over the forecast period. HNWIs require various services, including investment management services, tax advice, billing services and portfolio management services, among others," according to the Grand View study.

Researchers also say reducing the manual processes remains a priority, and surprisingly, the outbreak of the COVID-19 pandemic is seen as a boon for new growth opportunities.

"Several businesses and individuals are approaching wealth management service providers to seek investment advice and plan their investments appropriately in the wake of the outbreak of the pandemic," said a statement from Grand View Research. "As such, market players are responding to the changing requirements of their clients and diversifying their solutions and services to manage the accounting, estate planning, investment planning and retirement planning of their clients."

The robo-advisory segment is expected to witness the fastest compound annual rate over the forecast period due to the growing adoption of the robo-advisory platform to automate portfolio creation based on the income, risk parameters and other facets of a client's investment mandate, according to the study.

Several businesses across the globe are also focusing on deploying cloud-based solutions to ensure easy access to data and deliver personalized services to their clients.

Scroll down to get caught up on other recent fintech news you might have missed in our Wealthtech Weekly recap.

Raymond James launches new data-driven tool for advisors to support decision making

Before making that next big business move, Raymond James wants advisors to consider a tech-enabled 2 cents.

This week, the St. Petersburg, Florida-based firm introduced "Opportunities," an integrated application for advisors that uses informational resources, databases and analytics from across the firm and individual practices to deliver actionable insights for business decision-making.

Company leaders say Opportunities was built from input and feedback gathered from the Raymond James Technology Advisory Council of financial advisors.

Chief Information Officer Vin Campagnoli says it is designed to proactively identify and predict client needs to foster stronger relationships and overall practice growth.

"This is a multiyear, multiphase project that will only become more robust with future enhancements," Campagnoli said in a statement. "In this phase, advisors will be notified and prompted to take action on target touchpoints such as important client account milestones, financial planning insights, excess liquidity and even significant or recurring life events."

Following a pilot period, Opportunities is now available to advisors across the firm. The application integrates into an advisor's existing dashboard where they can tweak customizable options and parameter filters to meet their individual business needs. Based on their settings, advisors can view opportunities at-a-glance across their entire book of business to identify trends or focus on specific relationships or opportunity types.

Target opportunities, prioritized by time-sensitivity and level of impact, will prompt advisors to take action across the firm's tools, including its CRM and financial planning software. The dashboard also provides a shared view for teams, allowing for collaboration with features such as comments and action history.

Redtail updates electronic document storage to make paperless more painless

Orion's Redtail Technology on Thursday announced a revamp of Redtail Imaging to improve digital document storage for advisors.

Updates to Imaging include increased capability across operating systems, new licensing options, a redesigned user interface and the addition of an image archive allowing for the restoration of deleted files.

"We are always looking to introduce innovative enhancements across our solutions as we are acutely aware of advisors' need for modern, cloud-based, compliant document storage. A major upgrade to our Imaging solution has been one of our focuses this year, and we are excited to now make this available," Brian McLaughlin, Orion's president of advisor technology and Redtail co-founder, said in a statement. "These upgrades will simplify advisors' day-to-day workflow and give them more time to focus on client service."

Redtail will also offer a new licensing structure to advisors, allowing them to choose between two options with greater storage limits than before. Entry-level licensing will allow for up to 200GB of storage, and the enterprise license is capable of up to 1TB of storage.

Redtail is offering a free trial for new or prospective users who may be interested in signing up for Imaging.

Digital assets are in the dumps, but most high net worth investors remain unbothered

Despite the shocking headlines and steadily declining value, many investors around the world may still see a bright future for digital assets.

A new study from FT Longitude, the specialist research division of the Financial Times Group, found that 80% of high net worth individuals and 70% of family offices said they were either very interested or highly interested in digital assets.

The survey that polled 1,500 international investors on their attitudes and investment strategies with respect to digital assets also found that four out of five HNWI and family offices have been investing in digital assets in the past year. Less than 7% of HNWI and only 10% of family offices were uninterested in investing in digital assets.

Commissioned by crypto lending firm Matrixport, the study suggests that nearly half of investors expect most assets in the future to be digital and believe regulation will help to stabilize the market. Skeptical investors shared that internationally coordinated regulation would increase their confidence and appetites for digital assets, and the majority of investors believe education will drive greater adoption.

"This study looks in depth at how investors think and feel about digital assets," Laura Adcock of FT Longitude said in a statement. "It covers a unique year and gives us valuable perspective into investor sentiments before and after the crypto crash."

Eugene Lim, head of private wealth for Matrixport, said despite the gloomy market outlook, he has continued to see an influx of large investors in digital assets. That positive stance will have to serve as lifeblood for firms like Matrixport who need the crypto tide to turn in order to avoid becoming the next bankruptcy filing.

"The report uncovers valuable insights about what's important in driving acceptance and legitimacy of the asset class, and what it takes for our industry to mature."

Nearly everyone who took part in the survey said they wanted better ways to invest and identified easier-to-understand platforms as the biggest factors influencing digital asset adoption. Researchers said this finding highlights the importance of accessibility, much like smartphone-enabled mobile banking applications have transformed banking services. Other factors driving adoption were the entrance of long-term investors, traditional financial institutions offering digital assets services and increase of use cases for digital assets.

Education, like the sessions being offered at Financial Planning's INVEST Cryptocurrency for Advisors conference, will also remain important whether clients are interested in crypto or not. The FT Longitude study revealed that one in three investors admitted to investing in digital assets without fully understanding those assets.

Investors cited risk of fraud, cybersecurity risks, market volatility and lack of understanding as the key barriers to investing in digital assets.

Quant Insight rolls out new education, technology offerings for retail investors

Financial market analytics firm Quant Insight is introducing new tools they hope catch the eye of retail investors.

Called "eyeQ" and unveiled this week, the offering is a new set of analytics and tools designed for the retail investor community, but powered by the same AI-driven technology used by Quant Insight's institutional investors globally.

Officials say eyeQ analyzes millions of data points in real time across major themes such as economic growth, inflation, central bank policy, energy prices and more. It then understands how they all are all connected to highlight opportunities and risks. These data-driven insights cover 6,000 instruments across ETFs, indices, stocks, FX and futures markets. Analytics are presented to retail investors in simple and easy-to-absorb visuals.

With offices in New York, London and Limassol, Cyprus, Quant Insight has clients with total assets under management eclipsing $2.5 trillion incorporating Quant's analytics in their investment processes.

"The 'democratization of finance,' one of the major industry catchphrases of the last several years, has succeeded in one major respect — giving retail investors more opportunities to invest at a disadvantage," Mahmood Noorani, co-founder and CEO of Quant insight, said in a statement. "What is at the heart of that disadvantage? A lack of information, and not having the tools to convert information into actionable insights and ideas. This is our contribution to making the retail investor journey a more successful one with the launch of eyeQ by Quant Insight."

eyeQ is also being made available to brokerage firms through an application programming interface that allows them to plug eyeQ's analytics directly into their own client dashboards. Additionally, retail investors can access eyeQ's insights and signals directly via a variety of channels, including daily insights, a weekly video by Qi senior leaders and Live Signals delivered by email and the eyeQ investing community on Discord.

"With the rise of the retail trader has come a concurrent rise in new ways for these investors to share information, source ideas and debate topics and approaches. Discord has been at the forefront of this trend, and it only made sense for us to build a Discord community as we roll out eyeQ," Ilana Z. Younan, head of communications at Quant Insight, said in a statement.

Vestwell debuts new recordkeeping platform enhancements

Aaron Schumm, founder and CEO of Vestwell

In a move they say "leapfrogs legacy players," digital 401(k) recordkeeper Vestwell has announced a number of upgrades to its proprietary platform designed for the small plan market.

The enhancements aim to establish a better user experience for all Vestwell partners and customers, including financial advisors, third-party administrators, asset managers, employers and savers.

Vestwell can now connect to any custodian while providing TPAs and financial advisors greater flexibility to run and scale their practices. Through planned enhancements, the new architecture will also power each workplace and individual savings program Vestwell enables within a single, multicustodial platform. Those utilizing the Vestwell recordkeeping platform for their businesses will benefit from an elevated experience at a fraction of the cost of legacy platforms.

"Eighteen months ago, we set out to raise the bar, once again, creating a multicustody, multisavings program architecture, which could process traditional tasks at speed, scale and efficiency levels never before attained in the industry," Aaron Schumm, founder and CEO of Vestwell, said in a statement. "Today, we have delivered the infrastructure on which the workplace and individual savings programs will run over the next 20-plus years."

Other enhancements include real-time payroll corrections and improvements to the saver experience. Savers who request to withdraw funds from their savings programs for financial hardship, a job change or other reasons are now able to access their withdrawn funds in two business days.

Vestwell's portal also provides savers with greater visibility into where their money is during each process step, so savers have a clear understanding of when they can expect their funds.

"Our experience building out proprietary recordkeeping technology taught us that in the small plan market space, how you handle the 'unhappy path' makes all the difference," Jonathan Ferrara, senior vice president of platform strategy and architecture at Vestwell, said in a statement. "Small businesses do not typically have a dedicated payroll person, which can result in more mistakes compared to larger businesses. We found that legacy solutions could not efficiently handle the frequency of these scenarios, so we decided to reshape our own accounting tech stack to be more operationally efficient, deliver more value and provide a superior experience to our client base."