What’s next in wealthtech? Innovators weigh in at INVEST

June 16, 2022 4:06 PM

Financial Planning Wealth Editor Lynnley Browning and Ric Edelman of the Digital Assets Council of Financial Professionals spoke in a June 16 panel at FP's INVEST conference in New York.

Data management, client access to products, changing demographics and, of course, cryptocurrencies represent key issues shaping the future of wealth management technology.

Those are some of the key takeaways from the first day of the Financial Planning INVEST Conference, where industry professionals and big names like Ric Edelman of the Digital Assets Council of Financial Professionals and Lori Hardwick of Genstar Capital are gathering this week to discuss the critical technology topics shaping the future of wealth management. Two panels on the first day also included Stefanie Raiola of Riskalyze backer Hg Capital and Reggie Tucker of wealth and asset manager Manhattan West.

Since stepping down as chairman of Edelman Financial Engines last year, Edelman has been working full time as a crypto educator to financial advisors with the organization overseeing the Certificate in Blockchain and Digital Assets. He recommends that investors devote 1% of their portfolios to crypto, although he declined FP Wealth Editor Lynnley Browning’s requests to state the percentage in his own holdings beyond saying that he’s “overweight” in digital assets.

In the other panel, Hardwick led a discussion of the most important tech tools for advisors and clients and most promising areas for private equity and venture capital investors. She has spent more than 25 years in the industry and currently holds seats on the boards of digital 401(k) recordkeeper Vestwell, wealthtech firm Orion Advisor Solutions and independent wealth manager Cetera Financial Group.

For a sampling of the conversations underway among advisors, wealth tech entrepreneurs, capital investors and other professionals present at New York’s Midtown Hilton, scroll down our slideshow. For a look at the main takeaways for advisors from FP’s annual tech survey, click here. To see the agenda for the conference, follow this link.

Ric Edelman

Edelman places bitcoin in the same category as annuities, since “every advisor has a strong opinion about them — we love them or we hate them,” he said. He argues that conversations with SEC examiners have changed from five years ago, when there would have been questions about why practices have allocations to digital assets. Today’s questions concern why practices aren’t recommending any digital assets for their clients’ portfolios, according to Edelman.

“You need to get the knowledge in this space so that you don't look dumbfounded when a client asks you basic questions, ‘What is blockchain? What is bitcoin?’” Edelman said. “You're missing out on AUM, you're missing out on the ability to serve your client by maintaining ignorance in this field. You wouldn't do it in any other asset class. My challenge to you simply is, don't do it for crypto.”

Reggie Tucker

Asked about the biggest areas of focus in his firm’s investments, Tucker mentioned the greater access enabled by tech these days.

“It's this idea around the democratization of markets and the evolution of the small, non-traditional investor,” Tucker said. “That's something as a platform we're really trying to capitalize on and this idea of offering access to this new set of investors that have ventured into alternative markets.”

Manhattan West’s clients are now evaluating potential investments in and through platforms such as online-gaming focused Bettor Capital, crypto exchange Kraken, NFT marketplace OpenSea and instant messenger Discord, he said.

“We are seeing the same deal flow that the top VCs are seeing,” Tucker said.

Stefanie Raiola

In terms of newly emerging intersections of wealth and tech that Hg is seeing in the marketplace, Raiola mentioned “developing a picture of the client.” She cited the client of a local bank as an example.

“How can you put together different pieces of data to help the business as a whole better service that client?” she said. “So if I'm thinking about a local bank, that client has a mortgage with them, maybe a personal or auto loan, they have a checking account. But none of that data is in a central location. So how do we centralize that data, provide it in a nice package to the advisor and help the advisor understand what is the [long-term evolution] of this client?”

Lori Hardwick

At Genstar, which just invested in RIA consolidator Cerity Partners and insurer Amerilife this week, Hardwick has been thinking about the research suggesting that the vast majority of widows find a new advisor after the death of their spouse, she said. Estimates as high as 70% in some cases are some of the “more shocking metrics that I’ve seen lately,” Hardwick said.

“Women are much more likely to lean into financial planning and road mapping, less transaction, and kind of like the myopic view. They're more big picture,” she said. “As we're thinking about what tools they need to really think about how to grow as the world is evolving, those are some areas that we're focused on as well.”