A common refrain about digital advice technology is that while it may be good for small accounts and new investors, it is unable to handle the needs of a high net worth investor. Hedgeable is trying to change that with Tax Samurai, a new product bolted onto its digital private banking service designed for accounts with at least $1 million. Using artificial intelligence, Tax Samurai automates tax-efficient portfolios, trading and transfers, and overlays downside protection on holdings Hedgeable can’t sell. The AI, which Hedgeable calls “Katana,” also aggregates financial accounts, real estate and private investments and can provide HNW investors with estate and planning tools. Mike Kane, Hedgeable’s “Master Sensei” (in keeping with their Samurai theme), says it’s the company’s goal to use AI and machine learning to drive incumbent private banks out of business. “For years the digital advice space has been ignored and castigated as a ‘tool’ for kids with no savings, but Hedgeable’s Tax Samurai will begin to change this thinking,” Kane said.
Americans Think Estate Planning Is for the Ultra Rich
Prince is not the only one without a will. Forty percent of Americans don’t have one, and 17 percent don’t have a trust, according to a new survey commissioned by WealthCounsel. That could be because nearly half of Americans believe estate planning is only for the ultra-wealthy, the survey found. About half say their assets aren’t worth enough to worry about estate planning, and 46 percent say only wealthy individuals should consider a trust. "Attorneys across the country have a duty to help educate Americans that, when done properly and mindfully, estate planning can help individuals address everything from designating a guardian for children to transferring a family-owned small business from one generation to the next and even reducing intra-family conflicts,” said Matthew McClintock, vice president of education with WealthCounsel.
Three Challenges Facing Wealth Management
With global high net worth wealth expected to surpass $100 trillion by 2025 and the industry as a whole bouncing back after the global financial crisis, James Monaghan, head of client solutions, Americas, for Fenergo, writes that there are three core challenges facing private banks and wealth management firms. First, there's regulatory compliance, and he's not even talking about the DOL fiduciary rule. Instead, Monaghan focuses on anti-money laundering regulations, know-your-customer suitability rules and tax compliance—namely FATCA. That's not to mention the increased scrutiny to come following the Bahamas and Panama Papers leaks. Second, digitization poses a challenge for firms, which are struggling with cutting inefficiencies and costs and making a better client experience starting with onboarding. Client experience is the final challenge. With high net worth investors demanding more digital capability from their wealth managers, the firms that do the best job digitizing the client experience are the ones who will achieve the most success.