We asked several industry leaders to speculate on what the wealth management industry will look like in the year 2037. This one is from Aaron Schumm, CEO of Vestwell.
A bright future for financial advisors and consumers doesn’t come without a shift in traditional mindset. The world is forever moving and going to back to the “old days.” Only advisors who use technology effectively can remain a key driver in the conversation. Broker/dealers as we know them will be few and far between. Gamification will be the lure for young investors. Robos will grow (although with dilution) and be the go-to for the masses. Retirement plans will be mandatory in 35 of 50 states. Technology and data will drive the winners and losers.
With data, it is easier than ever to paint a picture of who you are as an investor. Technology used in games and by robo advisors will be a great asset to the public, especially in tech-savvy metropolitan areas. But very few firms will make it in the long run due to low costs, small accounts and a difficult road to profitability. Companies like Amazon and Google, who know more about you than you know about yourself, will be where you shop for your investment solutions.
We’ll see independent advisors, especially those outside of metropolitan areas, thrive. Those that win out will be FAs leveraging technology to scale their business at a low cost. As 401(k) and 403(b) plans become mandatory at the state level, we’ll see technology being used to better understand the investing public and evolve the offerings with their needs.
Mutual funds and SMAs will be replaced with custom, low-cost ETF-like products. This will align with the better-educated public's understanding of how taxes and fees impact their future.
The investment world will tie back to who you trust and why, whether a platform, data source or financial advisor. If you can’t trust they are doing what’s best for you, their businesses will be irrelevant.