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Tech Trends In Wealth Management To Watch In 2024

Industry experts point to continued proliferation of AI, tech stack integration, software supporting new fee models and advisors using an increasingly diverse array of applications to offer additional services as storylines to look out for in the coming year.

As we leave 2023 behind and prepare to enter 2024, here are a few technology trends to watch for in the wealth management industry.

Artificial Intelligence Buzz Keeps Buzzing

It should not come as a surprise to anyone who has been paying attention during the past year, but the rise of AI will surely continue to be a trend in 2024.

Machine learning, which looks for patterns, and generative AI, which makes decisions based on those patterns, have found their way into many parts of advisors’ work this year.

More 2024 Industry Outlooks:

Customized chatbots and other automated, AI-powered communications are already a fact of life for many firms.

Jaci Stanton, a managing director at consultancy F2 Strategy, said she sees AI playing an increasingly substantial role as it directly relates to the client experience, not just for the advisor behind the scenes.

“How do you create personalized content and push that out in a relevant and useful fashion for clients and then pull them back into your journey and expose to them potential financial planning solutions?” she said.

Increased Tech Stack Integration

Tech stack optimization has already been on the minds of advisors in 2023, but that trend is only set to continue into the new year as firms look to cut out double entry of data and other sources of waste.

Stanton said advisors will be increasingly conducting careful reviews of their technology systems in search of gaps. She said they will be asking themselves if they are truly integrated in “the proper way to carry in the data and disperse it” to increase productivity.

“We know that most firms are looking for organic growth,” she said. “There’s a lot of effort to drive organic growth and efficiency plays in that. But there is a word of caution around efficiency because efficiency doesn’t always drive organic growth.”

Software Supporting Non-AUM-Based Fee Models

As the traditional AUM-based models continue to be undercut by the rise of hourly, flat and performance-based fees, William Trout, director of wealth management for Javelin Strategy and Research, said pressure on advisors to embrace new structures will continue to rise.

“That reflects the rise in popularity of financial planning, especially in younger investors,” he said. “That is a trend that is kind of below the surface because advisors are saying their fees are holding steady. I broadly believe that, but underneath the surface, I think a lot is changing.”

Companies such as AdvicePay have already started taking advantage of this shift.

Trout said that the increased SEC scrutiny on RIAs to correctly charge clients will drive investment in billing software, as well.

“You need the tech to accommodate different models and also to avoid errors,” he said.

Applications Allowing Advisors To Expand Their Offerings

Advisors who want to serve their clients in new ways will steer diversification of services in the coming year.

For example, many advisors have clients that would benefit from estate planning, but few offer the service. That is set to change in 2024, said Trout. Advisors who want to extend their value propositions now have more options than ever before. While their sophistication level and functionality varies greatly, there are several tools and platforms available. These range from platforms such as Vanilla, to Envestnet's Trust Services Exchange, Everplans, Trustate, FP Alpha and others, which have already taken the manual data entry out of the equation.

“They’ve automated a lot of document generation and information capture,” he said. 

Tax planning is yet another area available to advisors looking to sweeten the pot for clients and prospects. Trout said software such as Holistiplan is “helping advisors make taxes not just a once-a-year-in-April” operation, but “an ongoing planning exercise just as high-net-worth investors have had with tax loss harvesting.”

“Tax planning is being democratized,” he said. “In a down or volatile market, it may be the only source of alpha for a client. You’ve come out of this world where you had free money for 10 years. Zero interest rates. Now you have high rates (with a) tough market. Taxes are important because it’s not what you earn, it’s what you keep.”

And the list goes on: helping business owner clients with valuations (Capitaliz), assisting on health insurance planning or selection (Caribou), or working with HENRYS to managing student debt (Finology).

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