Digital technology transforms wealth management industry

Wealth management is a shrinking industry as technology makes it easier for the rich to manage their own money or find independent advisors

The wealth management industry is shrinking and the relevance of banks to the market in decline, as technology makes it easier for the rich to manage their own money or find independent advisors.

The combination of easy access to information and the ability to access a wide spectrum of independent advice online has changed how rich people manage their money. Banks offering services in the area will have to change to stay competitive.

The early success of an online service that matches wealthy people with wealth managers demonstrates that investors want more choice in where advice comes from. – which has just received £500,000 angel investment, in its first external investment since it launched in 2012 – does just that.

Dominic Gamble, co-founder of, said he launched the company in response to wealthy individuals looking online for information about how to choose the best wealth manager for their needs. “We realised there was lack of useful guidance to help them do this and so the idea for a matching service was born,” said Gamble.

Read more about the challenges facing banks

Technology matches wealth to management

“We now have almost 40 wealth managers on our panel – from the largest, best-known and most prestigious names in the sector, to smaller, niche providers catering to ultra-high net worth individuals or investors with specialist needs. We have already helped more than 1,000 investors find the right wealth manager for their profile.”

It uses a proprietary algorithm that matches investors with wealth managers according to their needs and preferences, and the services and specialities of the wealth managers. The algorithm selects a maximum of three better-matched wealth managers, who will then contact the prospective client and provide a free, no-obligation consultation on their investment management and financial planning needs.

The regulated company has a wide range of investors participating, ranging from those with £50,000 through to those with more than £50m. In the past 12 months it has referred clients with more than £250m of investable assets to wealth managers. The UK site attracts 8,000 visitors a month.

Case study: Credit Suisse

  • Credit Suisse has reacted to the changes in wealth management driven by technology. It has launched an iPad private banking app in its Singapore-based business. 
  • Credit Suisse will extend the app to other devices, including the Apple iPhone, web browsers and devices operating on Google Android. “Digital technology is rapidly changing the way people use financial services,” said Hans-Ulrich Meister, head of private banking and wealth management at the bank. 
  • “They are increasingly using digital channels to contact their banks, execute trades and purchase financial products. As a leading global wealth manager, we are making significant investments in digital technology to capture this opportunity and deepen the relationship with our current and next generation of private banking clients.”

Overheads compound diminishing returns

But technology is not only making it easier for people to find the right advice, it enables them to keep up to date with their own investments. “Wealth managers’ monopoly on access to market information has gone, so I don't expect they will last too long,” one banking industry IT expert told Computer Weekly.

He said wealth management is a shrinking industry, in part because of technology that makes it easier to manage money. “At the moment there is still a market for wealthy busy people who don't have the time or motivation to manage their own money and want the personal touch. But the younger generation is more tech-savvy and open to wealth management services that don't need face-to-face discussions. So I expect it will be a shrinking market and become very niche in the foreseeable future.”

He said the cost of providing a personal service, with wealth managers in expensive offices, along with the risks around giving advice are not a good combination. “As returns have been harder to achieve in recent years and markets have been volatile, a client can end up paying a lot in costs and losing money on their investments. 

"Not a good conversation when a client shows up for a portfolio review and is presented with a bill as well as a loss on investments.”

“Wealth management/private banking will increasingly become an IT game with less personal contact. With the recent rise of the internet, it is much easier for anyone to find out about potential investments, whereas 20 years ago you really only had newspapers, monthly magazines or your bank or stockbroker.

Read more on IT for financial services