Why WealthTech Management Is Important to your Organization

Why WealthTech Management Is Important to your Organization

Financial Management

5 minutes Read | Published August 28, 2020 | Regina Ongkiko

Technology’s impact on individuals and companies has become more evident due to the recent health crisis. As warned by the United Nations Conference on Trade and Development, global commodities experienced their largest decline at 20.4 percent in March of 2020, and poverty continues to be on the rise. Managing finances and assets during these trying times has also proven to be challenging. Thus, WealthTech Management is becoming more relevant as people all over the world are realizing its importance.

Coming from the words “wealth” and “technology,” WealthTech puts together wealth and technology to provide digital solutions to improve the management of wealth and investments. Basically, it’s about using technology to foster better experiences and deliver more cost-effective,  yet superior products for individuals, families, and companies.

WealthTech is a subset of FinTech and the two should not be mixed up. While FinTech refers to the use of technology to make financial services more accessible, WealthTech is more focused on creating tools for wealth and investment management.

How does WealthTech differ from traditional wealth management?

Traditional wealth management involves wealth managers who offer a wide range of financial services like investment advice and general financial planning. All of the information is based on advisors’ expertise and experience. With technology entering the arena, companies and individuals can manage their investments and assets at a speed and efficiency that go beyond what traditional wealth management practices offer.

Truth be told, the wealth management industry has been pretty resistant to technology in the past years. One of the reasons for this is the misconception---and even the fear---that WealthTech tools can replace financial advisors. 

However, even though WealthTech uses specialized software and algorithms to streamline wealth management, nothing can really replace human interpersonal relationships. The automated processes actually help advisors to focus more on enhancing client relationships. In a nutshell, WealthTech enhances what wealth managers can accomplish, and understanding this is one of the first steps in mastering the technology while leaving room for human equation.

Dolfin Research shows that in the first quarter of 2019 alone, around $2.5 billion was invested in WealthTech startups. This was more than half of the $4.6 billion invested for the whole of 2018. With the blow from the recent coronavirus pandemic, more companies and individuals are putting more focus on wealth management. McKinsey & Company has pointed out that investors in Asian markets, for example, have seen a 10% to 15 percent decline in equity markets

As industries strive to bounce back from losses, it looks like WealthTech will play an important role in the so-called “new normal.”

How is the business world using WealthTech to their advantage?

WealthTech has already begun transforming the financial industry, thanks to its innovative and game-changing tools. These are some of the most popular WealthTech tools that entrepreneurs and companies alike are benefitting from:


This is usually the first thing that people think about when they hear or read the word ‘WealthTech.’ Robo-advisors are automated and use machine-learning algorithms to give advice on the most profitable investment options. Because AI does not cost much in overhead expenses, using robo-advisors help companies cut down on costs significantly. 

Here’s how robo-advisors work. Users can open an account online and transfer their capital right away. They are then led to complete a short survey about their goals and the level of risk they’re willing to take. Afterward, the algorithm sets to work and chooses stocks and shares. Fast, efficient, and data-driven. 

What’s the status of robo-advisors now? Well, Mashable says that the largest robo-advising firm in the United States is currently worth $800 million. Plus, a Business Insider Intelligence report foresees that robo-advisors will manage around $1 trillion by 2020 and jump to $4.6 trillion in 2022. 

Micro-investment apps

The general idea behind micro-investments is being able to invest small amounts on a regular basis instead of a large amount upfront. The commission is also usually waived, but there’s a minimal monthly subscription fee. Plus, micro-investment apps are free, convenient, and easily accessible.

This has revolutionized the business world as it has now become possible to invest and save over time without shelling out large chunks of money all at once. Because of this, micro-investments are very attractive to new investors.

Digital brokerages

Investors and businesses can now easily gain access to stock market information and investment opportunities, thanks to digital brokerages. Prior to WealthTech, most of the stock market information was only made available to certified brokers and investors.

Digital brokers are online platforms and tools that compile all the information you would need to help you decide where to put your money. Social trading has also become a popular feature as it lets you see how people in your network are trading. 

Both individuals and corporations are benefiting from digital brokers because of the easy access to information. Additionally, they are able to see the behavior of investments in their business network. This alone allows financial managers to be able to make sound decisions based on actual information provided by digital brokers as well as data from the social trends.

WealthTech and your organization

These three are just a few examples of how WealthTech tools can benefit businesses when it comes to managing their investment portfolios and making financial decisions. On the other hand, an Investopedia survey shows that a high percentage of investors actually prefer to conduct business with investment firms that are already using these kinds of tools. 

Currently, the global economy is picking up the pieces that the coronavirus pandemic continues to leave behind. The crisis has forced everyone to move online—even those that have been resistant to the digital transformation ultimately had no choice.

As a result, firms without digital tools have experienced losses. Meanwhile, according to Financial Planning,  leading digital advice firms have reported double-digit percent increases even though the stock market has been suffering. The pandemic has made people value their investments and wealth—they are willing to invest, and the firms with WealthTech integrations will probably be their first choice. 

What should you expect if you invest in WealthTech

WealthTech tools have made wealth management accessible even to smaller-scale businesses. Previously, wealth management as a whole was only associated with large corporations and wealthy individuals. All that has changed, thanks to WealthTech. 

With WealthTech, expect that you will be able to manage your investment portfolios more easily, so you can make better decisions on resource or budget allocations. Get ready to manage the tools and information that you’ll have on your fingertips when you invest in WealthTech. 

You’ll also need to stay on top of your investments and watch the trends in the economy. Even though the decisions and next steps will ultimately be up to you, WealthTech tools will be providing you with expert advice and recommendations. 

Plus, you can expect that other businesses in different sectors will also be following suit, so it’s better to be ahead.  It’s crucial that you and your business get ahead of the game even in these trying times. 

And as much as WealthTech has disrupted the wealth management industry, the pandemic posed an even bigger threat. It caught the world completely off guard, causing a lot of businesses to suffer.  Investing in WealthTech tools now will give you a leg up as you work on stabilizing your wealth and investments as you navigate this difficult time in the economy. 

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