Adaptability is Key to Surviving the Rise of the Machines

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By Jonathan Berr

According to a recent report released by Broadridge Financial Solutions and Aite Group, client assets managed on digital advice platforms is expected to hit $400 billion by the end of 2018. That’s more than double from the $160 billion forecast for 2017 and exponentially higher than the $65 billion seen in 2016.  Many advisors are rolling out new offerings to prevent client defections in the wake of the scheduled implementation of the Department of Labor’s Fiduciary Rule.

The report argues that wealth managers will seek “previously unheard of working relationships with competitors and that clients will have a “far greater say in the products and services they want,” according to a press release. Successful firms will need to adapt to the changing market conditions by adopting technology to meet the needs of their clients and stay relevant.

“The future of wealth management is one in which investors will increasingly demand that their financial advisors can quickly and easily access and leverage technologies that will enable them to analyze large data sets and provide actionable insights,” said Steve Scruton, President of Broadridge Advisor Solutions. “Predictive analytics will play a key role in helping advisors to learn more about their clients and provide the appropriate products and services at the right time.”

According to Forbes, clients are moving assets that would otherwise sit in savings accounts or with traditional human advisors and that online brokers are continuing to grow.  That’s not surprising since companies have in recent years slashed commissions and fees and reduced the minimum investment required to open accounts.  Of course, it’s still early days in the industry’s transformation, but the time to act is now.

“Those firms that leverage digital advice to attract the next-generation of clients, segment their existing client base by behavior or profitability, and ultimately, bring a high-end wealth management brand to the mass-affluent marketplace are the ones that will ultimately harness the competitive advantages of these innovative platforms,” said Alois Pirker, Research Director of Aite Group’s Wealth Management practice, in press release.

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