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Wealth Management 2044
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Gen Z Could Be A Throwback for Wealth Managers

The industry will continue to evolve, but its core drivers will remain the same. By Sal Cucchiara

There’s no question that we’re living in a moment of rapidly evolving technology, at a pace unmatched by any we’ve seen before. It has shaped how we communicate, work, think and live. As I look toward the future and reflect on the changes we’ve seen thus far, I am confident that when it comes to wealth management, the industry will continue to evolve, but its core drivers will remain the same.

When online brokerages originated in the 1990s, they threatened to significantly disrupt and even displace wealth managers. Over the past decade, automated advice platforms, or so-called robo advisors, were predicted to do the same. But this hasn’t happened. People continue to look to financial advisors, especially when their wealth expands and their financial goals become more complex. Moreover, the population of people with significant wealth continues to rapidly grow, and it continues to get younger. As wealthy individuals attempt to manage their own money, they quickly realize that they need professional help to achieve their financial goals.

While the business of advice will remain essential, we’ll continue to see changes in how we engage with our clients and how we modernize our business. Over the past 25 years, we’ve transitioned from automating the back office, to connecting online, to interacting via mobile. Digitization has created increasingly commoditized financial products. Just as Zelle built consensus across financial institutions to streamline the person-to-person movement of money, we’re likely to see increased real-time exchange across the markets through blockchain and other technologies. The average investor will have access to instruments that enable them to better manage risk, independently, across a broader range of investment products. And it remains to be seen what innovations in virtual reality, edge computing and further advances in artificial intelligence will continue to bring.

With increased digitization and the rise of increasingly sophisticated cyberattacks, the importance of consumer trust will only intensify, and security will become a key differentiator. A firm’s security track record will soon be as important to clients as the financial advisor they choose to work with.

In 25 years, Generation Z will be at the core of the wealth management industry. Born digital, they’ve grown up in an increasingly cashless society mediated by apps, with AI and automation built into the fabric of everything they know as normal. They will require sophisticated technology to make interactions with their banks meaningful to them, whether that’s through VR or technologies we haven’t conceived of yet. At the same time, Gen Z is sometimes called the “Throwback Generation,” in a nod to their industriousness, early focus on financial responsibility, commitment to saving and aversion to debt. We’re hearing that Gen Z actively turns to their parents for financial education and advice, and we’re already seeing them seek out financial education classes more than millennials ever have. Their pursuit of financial education and advice underscores the enduring need for the advice that the wealth management business provides.

It’s hard to predict the future of the markets or the underlying technologies that will support financial services, but we do know that financial advisors will serve as a constant, guiding our clients through whatever changes may come. As AI creates greater insights and greater opportunity, financial advisors will need to distill those opportunities to provide clients with insightful, tailored choices around risk and reward. Now, and in the future, we need to provide hybrid solutions that enable our clients to self-serve in transactions they can confidently handle, while turning to their financial advisors for more-complex needs. As markets fluctuate and fees continue to compress, the differentiators will be trusted brands, strong relationships, tailored solutions and superior service.


Sal Cucchiara is CIO and head of wealth management technology at Morgan Stanley.

TAGS: Technology
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