Out of the Dark Ages: A new tech dawn for wealth advising by 2022

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Note: This blog marks the first in a series on modern wealth management. The series will explore how an industry that's lagged behind most others in the ongoing digital revolution is starting to close the gap.

May 24, 2017 - How will technology change the typical wealth-advising experience five years out? Given the growing prevalence and linguistic fluency of e-assistants like Alexa and Siri, this much seems certain: artificial intelligence that can speak will have a growing say in how personal finance decisions get made. But how will that AI voice of 2022 sound?

With Stephen Hawking using his computer generated voice to warn that AI could one day end mankind, it's tempting to imagine a silver-tongue descendant of Alexa someday demanding all human advisors surrender full control of their client portfolios to it. Truth told, with the right mix of fear and paranoia it's easy to envision a 2022 where a relentlessly inquisitive robo assistant has ever so politely hijacked the dialogue between flesh-and-blood advisor and coveted client.

That's the dystopian take. And something close to it may come to pass for wealth managers who can't adapt to the disruptive wave of technological changes now cresting (see chart below). This is, after all, a profession whose resistance to new technology has led commentators to describe the current state as the “Dark Ages" when it comes to engaging consumers. But whether the resistors like it or not, change is coming. And for most forward-thinking advisors a different five-year outlook looms.

Technology Disruption in Wealth Management: 2022


Best case, wealth advising in 2022 will feature a powerful duet of virtual and human voices, each hitting the right grace notes at the right moment for a harmoniously integrated customer engagement. At the same time, we should stress that the robo assistant of 2022 will most likely still be just that, an assistant, albeit a far more capable one. In addition to not being able to marshal a regulatory-proof response, a 5.0 version of today's best virtual advisor will lack a reliable algorithmic capacity to assess the one factor that most affects how we handle our money: emotion.

Think about how we feel when we think about when and where we want to retire, which college is best for our kids, or what we want to leave our heirs. These feelings change from one year, month, or even week, to the next — and that's why effectively managing them will continue to demand constant human counsel. But ensuring that this counsel is the most-timely, best-informed kind will also require the interdependent presence of a virtual assistant.

In short, the 2022 model digital advisor, if properly integrated, will create a seamless customer experience. Far from dis-intermediating dialogue, this model will enhance the ability of wealth managers to respond with greater agility to a customer's needs when their expertise is wanted most.

To become a part of the above-outlined vision, transformation is needed from front office to back office. This blog — and others to come as part of a larger series — will explore how future disruption and integration of change will bring about a new tech-driven dawn in wealth advising. The series will also look at what industry players need to know, and do, to succeed in the new day that will follow.

This blog is co-authored by Boaz Lahovitsky, Senior Vice President, Wealth Management and Katherine L. Maher, Vice President, Wealth Management Product Development