Capitalizing on Innovation: Trends in Wealth Management

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Capitalizing on Innovation: Trends in Wealth ManagementThe top trends shaping wealth management and how to create a strategy to survive and thrive.

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Table of Contents

Introduction 3

Trend #1: More Integration is Taking Place 4

Trend #2: Digital and Traditional Offerings Converge 6

Trend #3: Regulatory Changes Prod Technology Investments 8

Trend #4: Digital Advice Strategies Proliferate 10

The Takeaway 12

Envestnet | Yodlee Wealth Management Solutions 12

Conclusion 14

© 2016 Envestnet | Yodlee.™  All rights reserved. Technology protected by one or more U.S. Patents or Patents Pending. Use subject to license terms. May include materials developed by third parties. Yodlee and the Yodlee Logo are trademarks or registered trademarks of Envestnet | Yodlee in the U.S. and other countries. All other trademarks mentioned in this document or website are the property of their respective owners.

Capitalizing on Innovation: Trends in Wealth Management

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Introduction

The wealth management market is a key battleground for financial services providers, as an estimated $41 trillion begins to change hands from one generation to the next. Current challenges for wealth management firms include everything from the persistent pressure on revenue, increasing expectations of investors and the digitization of financial advice. In this eBook, we’ll examine four major wealth management trends and opportunities to sharpen your competitive edge and create a more personalized and meaningful wealth management experience for your investors.

Capitalizing on Innovation: Trends in Wealth Management

Trend #1:

More Integration Is Taking Place

ROBOPLATFORMS

TECHNOLOGY

BUNDLEDSOLUTIONS

SUBSCRIPTION-BASED SERVICE

MODELS

Capitalizing on Innovation: Trends in Wealth Management

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As robo advisors have come on the scene, the price consumers are willing to pay for wealth management services has dropped substantially, squeezing the industry’s margins. Meanwhile, mass affluent investors are increasingly demanding the same access to potentially high yield asset classes and investing strategies as high net worth and institutional investors.

With technology and robo platforms pushing trading fees and commissions continually downward, and clients increasing their expectations, many firms are moving toward bundled investor solutions and subscription-based service models. Providing more services at a lower cost, these solutions will further intensify the pressure on traditional wealth management and transaction-based trading models.

Wealth management firms are facing persistent downward pressure on revenue, leading to cost cuts and a push for greater advisor efficiencies, supported by technology.1

1 “Capitalizing on Innovation: The Top Ten Trends in Wealth Management - Production.” Yodlee.com. Accessed June 15, 2016. http://www.yodlee.com/resources/whitepaper/capitalizing-innovation-top-10-trends-wealth-management/.

Capitalizing on Innovation: Trends in Wealth Management

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Capitalizing on Innovation: Trends in Wealth Management

Trend #2:

Digital and Traditional Offerings Converge

Capitalizing on Innovation: Trends in Wealth Management

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As more traditional firms adopt digital models, many technology startups will increasingly embrace some of the practices of the more traditional business models. While many existing start-ups undergo this transition, traditional firms are increasingly leveraging wealth management technology to launch digital advisor services. To enable either, both startups and traditional firms alike require a 360 degree view of their clients’ finances in order to be able to provide more insights and advice.

Acquisitions are now about more than just short-term revenue gains. They’re aimed at gaining access to new technology that offers the acquirer a competitive advantage.2

2 “Capitalizing on Innovation: The Top Ten Trends in Wealth Management - Production.” Yodlee.com. Accessed June 15, 2016. http://www.yodlee.com/resources/whitepaper/capitalizing-innovation-top-10-trends-wealth-management/.

Capitalizing on Innovation: Trends in Wealth Management

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Capitalizing on Innovation: Trends in Wealth Management

Trend #3:

Regulatory Changes Prod Technology Investments

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Capitalizing on Innovation: Trends in Wealth Management

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In 2016, the Department of Labor’s new fiduciary standard will induce brokerage firms to spend a greater portion of their technology budgets on regulatory compliance. This will cause some digitalization efforts to stall, but others should accelerate—in particular those projects that can help firms deliver more consistent, conflict-free advice within the “guardrails” set by their home office.

Capitalizing on Innovation: Trends in Wealth Management

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Capitalizing on Innovation: Trends in Wealth Management

Trend #4:

Digital Advice Strategies Proliferate

Capitalizing on Innovation: Trends in Wealth Management

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To deepen customer engagement and expand into new markets, traditional wealth management firms are increasingly moving into the digital advice and guidance world and working with robo-advisor technologies. While these services can provide immense value to customers, they can also cannibalize firms’ established advisor services.

To avoid overturning traditional client-advisor relationships, wealth management firms must integrate their advisors into the process and strike a balancing act between the use of technology and the human advice offered by advisors.

Capitalizing on Innovation: Trends in Wealth Management

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The Takeaway In summary, adding varying degrees of digital advice will become standard fare for firms competing in the mass-affluent market. And rich digital client engagement will become key for firms targeting the high net worth segment.

Because one size doesn’t fit all, firms will need to be sensitive to the existence of multiple customer segments and differentiate digital services by these segments and client behaviors to ensure that clients receive a more personalized and relevant experience. Similarly, financial advisors have to articulate their value proposition beyond the specific products that they offer.

All of these trends point to the need for financial institutions to better understand their client’s financial situation and to build business models on predictive data in order to provide a window into their clients’ lives. Advisors need to leverage a holistic view to provide clients educated advice and insights on their financial lives.

Capitalizing on Innovation: Trends in Wealth Management

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Envestnet | Yodlee Wealth Management Solutions As a leading provider of data aggregation and data intelligence, Envestnet® | Yodlee® offers wealth management solutions that enable financial institutions and their advisors to deliver advice through digital channels or a more personal, high-touch channel.

Whether you leverage in-house solutions or services like the Envestnet Investor Portal, access to a 360 degree view of an investor’s financial profile is changing the way advisors manage their clients’ needs. A holistic view across investment accounts enables investment professionals to better fulfill their roles as fully informed, trusted advisors.

Capitalizing on Innovation: Trends in Wealth Management

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Conclusion

With major shifts both inside and outside wealth management firms and a more competitive landscape, investors are starting to engage differently with wealth management firms. The trends shaping the industry can actually be opportunities for the firms willing to invest in new technologies, personalize their offerings, and change the way they work.

How can I learn more?

• Download the Yodlee Executive Summary: Capitalizing on Innovation: The Top 10 Trends in Wealth Management

• Watch the webinar: Capitalizing on Innovation: The Top 10 Trends in Wealth Management

For more information, visit: www.yodlee.com.

Global Headquarters: 3600 Bridge Parkway, Suite 200, Redwood City, CA 94065T: +1 650 980 3600, www.yodlee.com

© 2016 Envestnet | Yodlee.™ All rights reserved. Technology protected by one or more U.S. Patents or Patents Pending. Use subject to license terms. May include materials developed by third parties. Yodlee and the Yodlee Logo are trademarks or registered trademarks of Envestnet | Yodlee in the U.S. and other countries. All other trademarks mentioned in this document or website are the property of their respective owners. Yodlee 345 06/16