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The Word on WealthTech for April 2024

F2 Strategy's co-founder and CEO provides his take on the most important wealth management technology news of the last month.

In this month’s Word on WealthTech we’re covering announcements related to AI, partnerships, executive transitions and technology price increases. There’s a lot going on in the market, so let’s dive right in!

Orion Reveals Wealthtech Survey Insights at Ascent Conference

We found a few points of interest in Orion’s annual Wealthtech Survey. A big one that came to light during discussions at the conference was how poorly firms rated themselves on their technology offerings—only 45% think their technology is a value add. This was both surprising and alarming. Even worse, this result is coming from a technology-oriented crowd, which means the percentage is probably lower among the “real-world” population. The problem is we’re approaching a world of ‘haves’ and ‘have nots’ for technology. Firms that crack the code with technology enable compelling advisor and client experiences that allow them to grow. Firms that don’t face substantial lost opportunities.

Shaping Wealth Develops AI-Powered Behavioral Finance Assistant

Lydia, an AI-powered behavioral finance assistant, helps financial advisors better understand the emotional needs of clients and provides personalized financial guidance. This is a good example of AI starting to work itself into mainstream wealth management use cases. It’s early days, and we're holding back to see how this evolves, but it's a positive development that we’re seeing well-focused AI companies getting traction and gaining interest.

Dani Fava is out at Envestnet—to Capitalize on AI Revolution at a New Firm

Our first reaction to this news is that it’s disappointing to see such a creative innovator leave Envestnet. However, we’re excited to see what she will pursue in the future and what Envestnet will do next as well. A lot of embedded clients and moving parts can make investment in innovation hard for very large firms, but we’re optimistic that Envestnet will put the right people in place to take the company in a direction that leads to better outcomes for the wealth management industry.

Euroclear Expands Private Markets Offering with iCapital Partnership

Over 2,500 Euroclear clients will have access to the alternative funds available on the iCapital Marketplace platform, which supports 1,445 funds across private equity, private credit, hedge funds and real assets. iCapital is often seen as easy access to feeder funds alts. But behind the scenes they’ve been building a pretty significant technology infrastructure to support a lot more than just the alts universe. They’re tying together a significant amount of investment products with the capability to construct portfolios and execute and communicate portfolios. This partnership means a client now potentially has access to the global suite of investment assets.

Price Jumps in WealthTech

This last ‘headline’ is actually multiple headlines we’ve started to see. Orion, InvestCloud and others are raising their prices. It’s not welcome news for wealth management firms, but labor costs and hardware and software costs are going up. We’re not at the end of a rash of price increases across the industry either; more technology firms will increase prices for their SaaS products in the coming months. Renegotiating contracts is a good time to ask yourself if you have the right vendor or if it’s time to make a switch to find better innovation for the price.

F2 Strategy Acquires SKY Marketing Consultants, Elevates Wealth Management Services Offering by Blending Technology and Marketing

We’re making news again, too. We recently announced a new acquisition as we invest in expanding our capabilities to integrate marketing into the technology universe. We’re taking our client experience strategy chops and bringing the ability to marry marketing automation and MarTech into our clients’ technology infrastructure. We believe that more firms need to help advisory businesses achieve better results on their organic growth, so that's what we’re doing.

All said, the wealth management industry is trending in the right direction in terms of evaluating tools that can deliver on client and advisor experience. Let’s keep working hard to reimagine our business offerings through technology and get that Orion survey up next year!

TAGS: WealthStack
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