“The future is always unknown," he says. "With stress testing, you can see all the potential impacts, but we don’t ever say, ‘This is the one that’s going to happen.’ We can use machine learning to determine which stress tests are most likely, but then we still need humans to review it and say whether it makes sense.”
As for the other WealthTech trends, Ghanta states that blockchain has tremendous prospects. It will enable us to verify and audit a lot of WealthTech aspects. Nevertheless, we’re still years away from that advancement in the industry. He says that we still have a lot of education to do on how it works and how blockchain technology could be beneficial.
“Right now it’s just a fun thing with Bitcoin, but the reality is that its potential and security are amazing," Ghanta says. "The general population lacks knowledge of how blockchain works, and that makes it challenging for people to adopt it.”
HiddenLevers’ top 3 challenges
HiddenLevers is facing both technological and business challenges:
1. Automated testing is going to integrate accuracy, ensure that parts of the system are functioning as they should be, and add efficiency. Today it’s one of the hurdles for the company because of the system’s complexity, but Ghanta hopes that they will be able to accomplish the transition this year.
2. People forget about risk. When the market has gone up for 10 years without much volatility, people forget about risk. So it’s a challenge to make sure that clients aren’t taking on too much risk, or panic selling when volatility spikes.
3. Advisors are exhausted by the number of choices. Ghanta says they’re often confused by the variety of technology vendors they could work with. For a WealthTech company, it’s not easy to demonstrate why advisors need their solution and what their differentiators are.
Takeaways
Risk and wealth management always go hand in hand. HiddenLevers can empower portfolio managers with valuable insights about risk and help them explain to investors the possible effect each scenario can have.
Vasyl Soloshchuk is CEO and co-owner at INSART, a fintech and Java engineering company. He is also the author of WealthTech Club, which conducts research into Fortune 500 and start-up robo-advisor and wealth management companies.