Gary Linieres talks of a ‘demographic timebomb’ affecting wealth managers

With 2016 fast approaching so comes also a raft of fresh challenges and opportunities in the wealth industry.

2015 may be remembered as the zenith of the FCA’s Conduct Risk regulatory investigations, at least for the major players in the UK market, with UK banks and investment firms sanctioned for hundreds of millions pounds. Whilst regulatory burdens will continue to place operational and time/cost pressure on organisations another more fundamental challenge is looming for the UK’s and indeed the developed world’s wealth management and private banking communities.

A demographic time bomb ticking with mortal inevitability is driving the biggest generational transfer of wealth in human history. A new wave of technology dependant investors who have lived through the digital transformation of almost every aspect of their professional and personal lives are coming in to play. Over the next few years an ever increasing share of wealth will fall in to their hands and, if you believe most expert opinion, at least 75% of them will look to change their advisors.

In addition, the existing aged crop of wealthy investors are becoming ever more digitally conditioned with the prevalence of taxi, airline, accommodation and just about every other generally available service. Many of them are expecting a change in how they relate with their advisors and in the way they seek to make investment decisions.

So what does all this mean to the wealth managers and what should they do about it?

Wealth manager checking applications on iphone

Firstly, it is now a fact of life that with such rapid technological advancement hitting every aspect of our lives; digital transformation is no longer a choice – it has to be the cornerstone of how firms seek out new clients and how they manage and service existing client relationships.

Secondly, with increasing regulatory demands, slick new competition, increased availability of information and a general drive towards simpler more holistic advice models; margins will continue to be compressed.

Thirdly, there appears to be a growing obsession with Robo-Advice. Whilst I have no doubt that fully automated advice will become more prevalent at the mass affluent end of the wealth spectrum, I do not believe that at the mid to higher range of the wealth pyramid robo-advice will play a significant part. For most wealthy clients the reality is that there needs to be a combined approach. What is required is a service offering digital content, elements of digital advice and suitability processes, secure messaging with advisors and digitisation of many operational and administrative business processes. However, human interaction and the need for trusted personal relationships will remain an integral and critical part of the business for many years to come.

Finally, the use of the internet and the exponential availability of personal data available in the ether is a crucial opportunity for wealth managers to develop and grow their assets under management. New wave investors expect to be able to select their advisors using modern technology based methods. They will seek out the opinions of the people they trust who are other people like them, they want access to peer reviews, they want technology to suggest matches for their particular profiles, they want detailed information on prospective partners and they want information, content, comparisons and ultimately they want to be treated as individuals.

Wealth Managers and technology providers need to work together to bring about the necessary change to meet the demands of the new wave of investors. The technology is out there and widely used in other walks of life, the opportunity for us as a technology provider is to shape and enhance it to meet the unique demands of our industry the challenge for the wealth managers is to have the vision and courage to make the change.


Gary Linieres, co-founder of Wealth Dynamix has 20+ years technology experience, and serial wealth management technology founder.

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