Technology could help financial planning and investment firms to adapt to changing clients and regulations, but according to a PricewaterhouseCoopers study most industry participants are still resistant to technology.
“There’s a lot of talk about engagement and understanding with technology, but the reality on the ground is quite different,” says Michael Spellacy, leader of global wealth management at PricewaterhouseCoopers. “Our research shows that fewer than one-quarter of these firms actually have digital capabilities that go beyond email — that’s inconsistent with customer needs within the marketplace.”
PwC found that at least one out of three asset and wealth managers (34 percent) do not deal with fintech firms at all.
That may be because most planning and asset management firms (69 percent) feel like the main benefits of fintech are found in cost reduction. Fewer asset and wealth managers in the survey (60 percent) viewed fintech as a way to differentiate themselves from their peers.
“They’re missing the point: The use of technology is an existential question,” Spellacy says, adding that the big issue is about whether firms are adopting technology quickly enough to adapt to the environment they’re going to find themselves in in five or 10 years.
Of all the areas of fintech evolution, asset and wealth managers in the survey were most interested in data analytics for quantifying risk — 90 percent found the improvement of data analytics to be an important or a very important trend.
As data analytics evolve to higher levels of sophistication, they enable computers to better analyze market data to make investment decisions in real time.
“They’re literally one of the greatest differentiators available to advisors and asset managers because they can be used internally to reduce their cost bases and to streamline their operations, as well as to allow customers to engage in their own ‘what-if’ analyses,” Spellacy says. “That’s a customer-driven point.”
These sorts of analytics are also used in the back-end design of robo-advisors to allocate client portfolios — the more sophisticated the analytics, the more customization firms can bring to their model portfolios. Wealth and asset managers named robo-advisors as the second most important trend in fintech.
Blockchain came out as the least important fintech area for asset and wealth managers.