Over the past several years, Xtiva has developed an annual industry-leading trends report based on a survey of leading WealthTech influencers. The 2020 edition of the WealthTech Trends report was published in a blog post on December 4, 2019 and captured some illuminating trends based on how the world looked as 2019 was drawing to a close.

In only a few months the world has been shocked into a rapid transformation of which the degree of permanence remains uncertain. We thought it would be valuable to reflect on the original observations through this new lens.

While it’s tempting these days to dismiss any insights that pre-date the COVID-19 crisis, on balance, most of the trends still stand up to scrutiny. The timing of them may be impacted by the pandemic – some have been accelerated, while others delayed – but the gist of the key observations remain on target.

Download the full report: WealthTech Trends 2020.

Five WealthTech Trends

Here’s a quick review of the five key observations we made back in December 2019 and how current events seem to be playing out.

1. “AI and data-driven technology will remodel advice, powering scalable and ultra-efficient money management and goal planning, while shifting human advisors up the advice stack.”

Human advisors are critical in times of crisis because people need emotional support and reassurance as much as they need investment advice. But, the AI and data trend in investment management is not going away because, implemented effectively, these technologies can enhance and augment what a trusted, human advisor brings to the table.

2. “Holistic planning will become the foundation of advice and guidance, and regardless of the delivery modality, will accelerate the collapse of non-customer centric silos.”

The pandemic has triggered a crisis in public and personal health, the economy and global financial systems, thereby demonstrating a profound interconnectedness of these issues. Any planning activity must take this comprehensive spectrum of issues into consideration to be relevant.

3. “Technology will empower a new type of enabled customer, seeking more collaborative wealth management relationships.”

Of all the trends observed back in late 2019, this is the one that is most likely going to be drawn out over a longer period of time. Although, if you pay any attention to Julie Littlechild’s blog, advisors that get a head start on this co-creative mode of working with clients during the current crisis will emerge leaders in the post-virus period.

4. “Scalable, integrated digital wealth platforms will open new markets and render old business models obsolete.”

We’ve seen an initial surge in robo-advisor sign-ups since the start of the pandemic. It’s hard to put a finger on exactly what this signifies, but on the surface it suggests an immediate increased demand for virtual and automated investing tools and platforms. With extended restrictions on in-person meetings, digital wealth tools that allow customers to manage investments remotely will only increase in popularity – as in every other industry.

5. “New digital asset classes, trading platforms and intelligent tools will radically expand the ways and means to invest.”

One of the first responses to the financial crisis has been a renewed interest and urgency in digital currencies and financial management. Every central bank in the world is examining digital currency now and new governance systems are rapidly evolving to address this challenge. According to Lex Sokolin, the pandemic has triggered a “generational opportunity” that you will miss if you have your head in the sand.

The Great Disruption

The WealthTech Trends 2020 report was crowdsourced insight. The strength of this approach is found in the diversity of perspectives and opinions.

One observation, submitted by Responsive AI’s CEO, Davyde Wachell, seems particularly prescient in retrospect:

“RADICAL disruption from the share economy, blockchain, AI, demographics and geopolitics are upon us, and once again it will not go down as the forecasters have predicted. We’d do well to remember that disruption issues forth from the scythe of Saturn during the depths of crisis, in shadowy ways that are only truly understood in hindsight.”

A Great Disruption is now upon us and we believe it will trigger substantial acceleration of change in several areas. Events of this magnitude, with this range of change vectors, are potentially extinction level events for some wealth management firms and wealth technology providers. It is clear that the legacy game plans of many wealth managers will increasingly be proven to be non-differentiating (i.e.: product shelf, service offering, tool set or investment approach) which will only result in the five core trends becoming more relevant. Firms that are unable to make rapid investments in both enterprise level and practice level scalability and commit to relentlessly focusing on arming the business for customer centric growth may well wither.

This reality was captured recently by Randy Bullard of Charles River who shared some thoughts on Linkedin that speak to the magnitude of the change that is looming:

“Everything is about to change in the wealth and asset management industry.

“A tsunami of change, cascading across the global capital markets for the next few quarters. None of us wished for such change, but we’re stuck with it. We can only choose how we deal with it.

“Money is going to be put into motion. Channels are going to shift. Portfolios are going to change. Capital market assumptions will be reset. Modeling and management of risk will be re-invented. Consumers will migrate to new providers and products and services.

“The next Apple, Microsoft, Amazon, Schwab and Vanguard are going to be born out of this – entrepreneurial businesses that address the new problems with the right new products and services, and that are willing to take the necessary risk when most are still playing defense.

“Today, we’re all playing defense, trying to figure out what this means for our own business, our customers, partners and prospects. I’ve been a road warrior for 25+ years, so this working from home presents a unique opportunity – a time to think, and reflect, and rewrite the offense playbook for what happens when the quarantine lifts.

“Because there won’t be a return to “business as usual”. That game is over. New game, new rules, new winners and losers.”

Without a doubt, this crisis is far from behind us and many serious and acute issues still need to be resolved, but we must acknowledge the systemic change that has been accelerated by the pandemic. As we adapt our businesses to the new realities at play in community health, the economy and the financial services industry, we would be wise to recognize that many of the trends have already revealed themselves – it’s the urgency that has increased so precipitously.

Download the full report: WealthTech Trends 2020.