Technology is changing asset management.

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In the old world of banking, savings and investment professionals viewed the world as two classes of people, wealthy clients and ordinary people.

The first category where offered wealth management services, and the latter where offered a savings account.

[source: Hernaes] However, banking customers were developing more sophisticated needs and the rise of self-service investment and trading platforms captured the attention of the mass affluent segment when they arrived in the mid- to late nineties. As a result, the securities industry reached a stagnation in growth and ultimately major consolidation of the brokerage industry.

Changes in the regulatory landscape also challenge status quo in the asset management industry through MifID II and Retail Distribution Review (RDR). Key takeaways from the UK market shows that the implementation of RDR has led to an advisory gap, leaving 5,5 million banking customer “underadvised”. This strongly favors self-service platforms, and players like Nutmeg has seem tremendous growth following the implementation of RDR in 2013.

With the rise of robo-advisors and intelligent automation, asset managers and financial advisors are potentially facing the same fate as the retail stock brokers. According to a survey conducted by the CFA Institute, the majority of respondents, which included more than 3,000 chartered financial analysts around the world, view asset management as the industry most at risk from disruption by automated investment tools.

Robo-advisory is a fraction of the market compared to overall assets under management, but the industry is preparing for a much more competitive future. That future is one of greater choice because “robo-advice represents the democratization of wealth management,” according to Dirk Klee, Chief Operating Officer at UBS Wealth Management. Too meet this development, UBS have developed their own robo-advisory service containing investment options that were previously only available to the distinguished few are offered wo a wide range of customers. UBS recently launched online wealth manager, SmartWealth, which lets people gain access to the Swiss bank’s investment expertise with as little as £15,000 to invest. The previous investment threshold was £2 million.

While incumbents are still addressing traditional clients, the demographics and user behavior of the typical customer is changing. Marketplace lending is not only a source of capital for SMEs and individuals, but offers an additional asset class for private investors that where once only available for wealthy clients as well as receiving a AA- rating from Fitch and Aa3 rating from Moody’s on the most senior notes on a securitization of parts of the loans portfolio earlier this year.

There is also a disconnect between the rising economic power of women and the fact that women are still a disproportionately small portion of the world’s savers and investors. The rise of everyday banking services that integrate savings as a part of daily spending behavior lowers the barrier to start saving money will also have a profound impact on future customer behavior. Their high frequency, tech-savvy approach demands and uses a variety of self-service channels and services, including personal finance management (PFM) tools and financial alerts. According to Javelin research, this demographic named ‘Moneyhawks’ are the most profitable customers banks don’t know they have.

Even though much of the change is focused on the front end, it will ultimately affect the whole value chain. Low interest rates and global trends are correlating increasingly with fund performance, and explains over half the average stock returns, favoring low cost ETFs over active asset managers. As active managers are struggling to outperform the market, Vanguard is lowering account fees to as little as 30 bps, compared to 100+ bps from a typical managed fund.

There is nowhere to hide in the changing landscape of financial services, and asset management is no exception. There will still be room for the human element in asset management, but technology will play an increasingly more important role. At the end of the day, the democratization of wealth management has the potential to make previously unavailable investment alternatives accessible to a much larger market.

 

Internet Search Gaining on Word Of Mouth

Demand for products and services are driven by corporate profits, regional and global expansion, and the overall health of the U.S. economy.

Although some of these purchases are necessary, many of them can be postponed during economic downturns.

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Although consumers still commonly rely on word of mouth to find the products and services they want and need, the Internet is becoming an increasingly important source for generating new clients and customers.

“Many business owners and marketing managers are hesitant to invest time and resources into expanding their online presence because of limited budgets or questions about the return on investment. But in today’s connected marketplace, businesses that lack a robust digital, mobile and social strategy could miss out on new opportunities.”

Independents, entrepreneurs and business owners should focus on staying ahead of the curve by using several methods to market themselves, including having a Website with quality content relevant to their audience and employing an array of social media platforms to promote their content.

Industries we serve: Accounting & Tax Advisory, Advertising & Public Relations, Campaigns, Consulting, Culture & Education, Entertainment, Fashion, Financial Services, Food & Beverage, Health & Wellness, Hospitality, Industrial, Insurance, Law Firms, Manufacturing, Municipalities, Museums, Non-profit Organizations, Professional Services, Public Services, Publishing & Media, Real Estate, Recruitment & Placement, Retail, Start-ups, Technology, Travel & Leisure, Unions

By taking steps to improve their online presence and making sure they can easily be found by the growing percentage of people searching online… independents, entrepreneurs and businesses can build their reputation and their client/customer base.

 

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