2030 is just another 7 years away, yet the reality of self-driven vehicles, bots as colleagues, novels authored by AI, mechanical assistants at home, implantable devices or enhanced predictive tools is not a distant possibility. With the scale of technological disruption that we are experiencing, these very futuristic ideas could well be a part of our daily lives within the decade.

In the last few months, the world of technology has been upended by ChatGPT, a jaw-dropping Generative AI tool launched by a startup, Open AI, in November 2022. This kind of technology, that uses deep learning and natural language processing models to produce new data, is likely to have a generational impact, like one we have never experienced before. With all these disruptive technologies abounding, I have found myself asking the question if as a wealth manager a day would come when AI will beat us at our own game. Imagine a client asking a robo-advisor to build a customised portfolio with all the checks and balances of risk-profiling, suitability, asset allocation, scheduled re-balancing, and downside-protection, and the AI executes it before the minute hand of a clock even makes a single rotation. Yes, the wealth management industry as we know it today, is under threat; and in such a highly data-driven, technologically fast-paced, and informed society, we will need to evolve to cater to the needs of clients who are financially more sophisticated, technologically savvy, and purpose-driven. We will all need to embrace technology and I outline below three transformations that I believe will define the future of wealth management.

1. One foot in analogue, one in digital

We will see more sophisticated processes and improved AI offer clients much more knowledge at their fingertips. The ability to gain insights from all this information will require professional intervention, because the paradox of an information-(over)loaded society is the lack of time to differentiate between what is relevant and what is not. Wealth managers will need to develop the ability to derive client-specific insights, interpret data, and turn mined-insights into actions at scale. The wealth manager of tomorrow needs to be adept at using relevant technology faster and better than a client, to create a moat that makes them indispensable. Digitization will further allow wealth managers to create more transparent and measurable metrics, and this will help clients analyse the true value created by their managers’ investment decisions.

2. Democratisation of state-of-the-art wealth management technology

Today, smaller wealth management companies and investment advisors find it challenging to scale because state-of-the-art analytics is expensive and harder to integrate with smaller systems. I believe there will be democratisation in the future, where software will become cheaper, more accessible, and easier to integrate. Reduced costs and increased efficiencies will enable smaller players to service complex portfolios, providing rich-insights and seamless analytics, that till now have been the domain of large, established players. This will mean more boutique and niche firms serving specific client segments and geographies in the future.

3. Designing propositions for purpose-driven growth capital

By 2030, the last of Gen-X will relinquish control of their wealth to the Millennials in their family, and their next gen, Gen–Z will start actively participating in investment decisions around the family wealth. Wealth managers will have to cater to the needs of multiple generations, not very dissimilar to today, but the intent of the wealth will be different – the Millennials will be looking for preservation and the Next Gen for purpose. Wealth managers of the future will have to leverage data to source purpose-driven growth capital products, wherever they may exist, to generate alpha, while still saving the planet. The industry will move from a “push the product” to “pull a product” into a client portfolio.

By 2030, to stay relevant, wealth managers will have to transform themselves from being mere financial advisors to becoming life advisors to their clients. Finding talent that understands the fundamental shift in mindset and changing dynamics, will be hard to find and the war for talent will continue to rage. AI would have made significant strides in the financial industry, but it will still be hard to replicate and replace the unique insights and emotional intelligence that human beings possess, because life situations and experiences are unique and cannot be parameterised. The debate is not about analogue vs digital, or speed vs quality, but about trust. We are the custodians of wealth and trust; and we will continue to be relevant and meaningful even in 2030, albeit with sophisticated productivity and analytical technology tools that can help us deliver a better client experience.

(This article was published in BSE Brokers' Forum Magazine - April 2023 edition)