Long Read  

How technology is changing wealth management

John Wilson, UK managing director at technology consultancy Avaloq, and who has worked on some of the largest re-platformings and other major technology projects in the wealth management space, says: “There is a tipping point where the additional processing power of the cloud and of machine learning creates new opportunities, particularly in portfolio creation and optimisation. 

"A combination of processing power and analytics can take on board a client's preferences and make real-time suggestions based on events in the market. There can be hyper personalisation of portfolios and in terms of what the client sees, the client interface." 

But he notes that human oversight of the machines remains an important priority, and this will remain the case in future for regulatory reasons, even as clients become more comfortable with technology. 

As evidence that clients are becoming more comfortable with it, he says: “A survey we ran recently indicates that around 70 per cent of European investors are comfortable with the use of artificial intelligence in advisory.”

Small pot problem 

Philip Milton, who runs an advice and discretionary management company in Devon, and has done since the 1980s, says technology has certainly meant costs have fallen for a business such as his, and enables his company to “effectively subsidise” new clients that have smaller portfolios.

"For example," he says, "we have some simple but sophisticated investment management and dealing systems that enable us to look after smaller clients so they receive the same care and attention usually reserved for larger ones, and with percentage-based costs without minima, so if we end up trading even, say, hundreds' worth of an asset, it is a piffling charge to them but it is part of a bigger deal. 

"I suppose too we discovered the benefits of a ‘platform’ well before that word was used, creating a system in 1987 and one which has evolved and improved ever since so we can use it as our tool to help us.”  

Warren says the ability to use technology to create a “hybrid” model, where AI can be used to risk profile and place clients in basic portfolios, but also have some element of human advice, will become the norm. 

He says the next stage in the evolution of technology in financial services could be the adoption of the principles of open banking into the wealth management space, with all of a client's financial information, including bank accounts and so on held in one place, allowing the wealth manager to provide a holistic service, as all of the financial information is readily available.