The world of investment and asset management is entering a new era where traditional methods are gradually giving way to innovative technological solutions. This transition, drive not only by technological progress, but also by a change in investor generations, requires the industry to adapt to new realities. This includes stimulating the rapid development of the wealthtech industry.

Global generation change of rich

According to the study  "Wealth Market Landscape (Framing the opportunity space)" by British technology company 11 FS, a massive transfer of wealth from baby boomers to millennials is expected over the next twenty-five years, amounting to approximately $84 trillion. New owners of capital, born in the digital age, expect not only a financial return on their investment, but also a process that aligns with their personal values and interests. They strive for transparency, flexibility and customization of offerings, which requires the industry to deeply transform its approach to asset management.

The experts of 11 FS say 76% of UK advisers will retire in the next decade. While today 90% of Very High Net Worth and Ultra High Net Worth clients are highly loyal to their asset managers, their inheritors will easily move on to new managers if they are willing and able to meet their demands for speed, automation and value matching.

Increasing digital literacy of capital owners 

In fact, this new request is relevant now – there is no need to wait ten, let alone 25 years. According to PwC, in 2016, 85 % of rich people used more than three digital devices. It is clear that even eight years ago, rich people had a high level of digital literacy. The Covid-19 pandemic has accelerated the process. According to the study “Defining a new U/HNW ecosystem positioning & lifestyle story”, conducted by Ten Lifestyle group, 89% of investors prefer to use smartphone for any transaction. The authors of this study predict that by the end of 2024, 15% of the asset management process will take place through video conferencing and 25 % – through applications.

Digitalization of financial transactions

Thus, a dynamic digitalization of the investment process is already gaining momentum. Roboadvising and solutions based on AI are implemented at all stages of serving clients – from initial advising to complex investment operations.

A typical asset manager today uses over ten different technology tools designed to improve every aspect of the client experience. The adoption of AI heralds the automation of more than 35% of these tasks. However, it is important to realize that technology does not replace human expertise, but rather enhances it, providing asset managers with powerful tools to improve efficiency.

There are already startups in the market, which offer revolutionary solutions that combine technology and a customized approach. Examples include Era and Parthean – startups offering solutions where AI serves as a reliable co-pilot for humans in asset management.

Range offers an AI-enabled wealth management platform that significantly reduces the cost of service and makes financial advice accessible to a wide range of clients. Such solutions help democratize the wealth management industry, opening it up to new categories of investors.

What is the role of an adviser in the process? It is changing: there is a shift from full service throughout the entire customer lifecycle to participation in important, sensitive or complex situations. Advisors must have a holistic view of their clients – assets, liabilities and cash flows, as well as the products or services needed. If needed, advisers will have to satisfy client requests that go beyond the boundaries of the financial and investment sphere.

From wealth management to lifestyle management

Very High Net Worth and Ultra High Net Worth categories are people of the world who develop their business in different countries, live in several cities, countries and even continents. It is important for them to feel at home everywhere, have no problems paying their bills with a card in different parts of the world, attending trendy events in a city they are staying for a day, and be accepted in the circle of people close to them in status. Planning leisure, educating children, investing in luxury goods and art, personal real estate, etc. – all this is included in the sphere of interests of rich and ultra-rich people, in addition to finance, investments and asset management. Digitalization of lifestyle services is the solution. At present, some companies do solve the problem partially by providing services in concierge as well as less obvious areas, for example, art.

Of the largest art collectors, entrepreneurs (the category of the wealthy most gravitated toward technology) make up nearly half, according to Ten Lifestyle group. Sotheby's has spent years improving its digital offering, including collaborating with EBay. As a result, the company has developed a personalized channel that allows you to monitor, participate in auctions and pay for items through the application. Eighty eight percent of wealthy art collectors surveyed by Ten Lifestyle group in 2022 were interested in purchasing digital art in NFT form.

The digitalization of art services is just one example of a wide range of interests of modern high net worth owners, which covers inheritance, investment, lifestyle, philanthropy and much more.

Many digital and other technology initiatives fail because they focus on a couple of aspects, but do not use a holistic approach in solving clients problems from the overall wealth perspective.

We believe that companies, who are the first to combine individual technology solutions for the ultra-wealthy people in a single ecosystem and create a new standard in wealth management, will be the winners.