Hybrid advice and Regtech
Analysts at GlobalData Financial Services provide expert commentary, insight and data on the global private banking and wealth management industry that is engaging, actionable and informative.
Analysts at GlobalData Financial Services provide expert commentary, insight and data on the global private banking and wealth management industry that is engaging, actionable and informative
The future of digital investment is hybrid advice
Investors are attracted to the price convenience of digital solutions; however, the lack of physical contact and support in times of market volatility is a drawback for many unexperienced investors, according to GlobalData Financial Services. Scalable Capital has addressed the issue with a new personal advice service.
In January 2018 digital wealth manager Scalable Capital launched its personal advice service in the UK, which allows investors to call or have a face-to-face meeting with a qualified financial adviser.
With a fixed £200 ($270) fee for the entire advice process, the company says it launched the service to answer demand from “wealthier clients” with complex needs that require more than just investment management solutions.
Incumbents of the likes of UBS have already addressed the need for hybrid advice and rolled out their proprietary robo-advice platforms alongside their existing adviser-led propositions.
It was only a matter of time before digital disruptors would do the same and bridge the gap of personalized advice. It is also likely that other fintech startups will follow suit, and in fact, Wealthsimple already provides individual advice to its clients over the phone.
As per our data, hybrid advice is the way forward, not only for digital platforms, but also for incumbent providers.
Over 75% of wealth managers interviewed for our 2017 Global Wealth Managers Survey agree that digital access and channels are essential for wealth managers serving HNW investors. Almost half are looking to partner with fintech start-ups over the next 12 months.
The successful wealth management propositions of the future will combine the best of human and digital capabilities. While human advice will remain a staple for guiding clients through their financial journeys, a digital proposition is essential: once the planning process is taken care of, clients will look for a direct and hands-on approach to managing and tracking their savings.
Regtech will reduce wealth management compliance budgets
Wealth managers will again find themselves dedicating much of 2018 to adopting new compliance requirements. With this comes associated increases in operating costs. However, regtech will make the process more cost-efficient, according to GlobalData Financial Services
In 2018 the wealth management sector will face another wave of regulatory changes that aim to make the industry more transparent and restore consumer confidence. #
In Europe, MiFID II entered into force in January 2018 and the General Data Protection Regulation will be effective from May.
On the other side of the ocean, the US financial services industry is getting ready for the Fiduciary Rule, which is due to enter into force in 2019.
Across the board, as of January 2018 all countries that signed the OECD’s agreement on automatic exchange of information must now be fully compliant with the Common Reporting Standard and report on accounts held by their residents.
Regulation has weighed heavily on wealth managers’ operating costs in the past few years.
Wealth of Opportunities II, a joint report by the British Banking Association and the Wealth Management Association, confirms operating costs increased steadily up to 2015, mainly because of increased spending to cover compliance requirements.