Practical analysis for investment professionals
13 February 2019

2019 US Wealth Management Outlook: The Old Guard and Fintech Cozy Up

The old guard wealth management industry and fintech have kept each other at arm’s length for years, claiming the other lacks the tools to meet current client needs. But in 2019, we expect they’ll put past differences aside and finally cozy up to each other.

“Partnerships” will be the buzzword for the new year as incumbent players realize they must embrace tech to meet the demands of their millennial clients, while so-called fintech players realize sometimes clients really do want the intimacy of a face-to-face meeting.

As proof of concept, look no further than Morgan Stanley’s recently announced bid to buy Solium Capital in a $900 million all-cash deal — its biggest acquisition since the financial crisis.

By snatching up the Canada-based employee stock plan administrator, which counts Hootsuite and Dropbox among its clients, Morgan Stanley hopes to facilitate a path to draw millennials into its wealth management practice. Solium, meanwhile, receives the backing of one of the largest banks in the United States.

We expect to see more of this in 2019 — whether it’s outright acquisitions of smaller players or strategic partnerships between incumbents and fintech players.

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With the $30 trillion generational wealth transfer in its early innings, pure-play robo-advisers are finding that their algorithmic services aren’t enough to win over millennials on the brink of their asset accumulation years. A robo-adviser may be sufficient when a plan is in place, but fintech and artificial intelligence (AI) have yet to replicate the insights gleaned or the comfort level achieved through one-on-one conversations. This is especially true for young families balancing student loan payments, first homes, and education planning for young children.

Even my millennial son told me he was frustrated that robo-advisers kept being pushed on him when he really wanted a human adviser to help him navigate through the world of investments.

But it’s not just the robo-advisers that gain from partnering with incumbents. Traditional wealth managers also benefit by having their services buttressed by fintech players. It’s no longer an all-or-nothing dance between the two: Incumbents can leverage in-house technology to spend more time forging meaningful client relationships. What we’re seeing in 2019 is that an industry once known for its left-brained quantitative skills can now work the right side of its brain — all thanks to technology, ironically.

Clients will soon be benefiting from hybrid advice. While algorithms can quickly churn out portfolio options that advisers previously spent days crafting, advisers today can use the time saved to think more critically about their recommendations. Rather than prescribing financial advice, they can embrace a more holistic approach to determine what their clients want and how they feel about their portfolio and wealth.

But the expected partnerships in the wealth management industry don’t just apply to adviser–client dynamics. Total investable assets in North America are expected to grow by nearly 10%, to $28.8 trillion by 2021, according to a 2018 Ernst & Young study. And that wealth is not just concentrated in a mix of stocks and bonds. The era’s low interest rates have compelled households to allocate some of their wealth to alternative asset classes. For this reason, advisers need to know how to manage and analyze diverse holdings.

And as the wealth management industry continues to grow — both in terms of assets and clients from the wealth transfer — it will need to attract a young, engaged workforce to meet increasing and evolving demands. Analog solutions won’t cut it in a digitized world, especially when it comes to luring talent away from Silicon Valley. While many firms previously relied on a patchwork of legacy systems to conduct business, today’s younger workforce wants clean, reliable interfaces to complete their work.

We expect to see increased intergenerational team partnerships in the wealth management industry. After all, the “average” adviser is 55 — and perhaps thinking of their own retirement. We anticipate they will be leaning on their younger staffs and calling on their expertise. While advisers may have the years of experience, younger employees — and digital natives — will know new ways of reaching existing clients and prospects.

The room for partnerships in 2019 extends throughout the wealth management pipeline. From mergers between incumbent and fintech players to generationally diverse teams amid the wealth transfer, it’s clear we’re moving from conversation to commitment.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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About the Author(s)
April J. Rudin

Founder and CEO of The Rudin Group, April J. Rudin is widely acknowledged as a top marketing strategist for the U/HNW, wealth-management and wealthtech sectors. Distinguished by her ability to forecast and leverage critical trends and her expertise in brand differentiation, she leads a firm, now in its 15th year, that designs bespoke marketing campaigns for some of the world's leading wealth-management firms, fintechs/wealthtechs, and family offices; campaigns that strengthen brand value and drive client acquisition. Rudin is recognized by IBM as an "Influencer" in wealth management and fintech, and is a regularly featured source of expert commentary to international news and business outlets, trade publications, and broadcast media. She produces the CFA Institute’s Annual Outlook for US Wealth Management; and speaks about wealth, next-gen, and fintech at conferences in the United States, Europe, Asia, and Africa. Rudin has created an extensive repertoire of thought leadership that has appeared in Forbes, Huffington Post, American Banker, Enterprising Investor, Family Wealth Report, Fundfire, and, and heads the editorial board for NexChange, a global fintech start-up based in Hong Kong. A member of Board for First Rate,and WealthBriefing, she also serves as a judge for the FT Wealthtech awards, Family Wealth Report’s Annual Wealth Management Industry Awards, Finovate and others. Rudin is the mother of two sons who are quick to point out that they considered her an influencer well before IBM did.

6 thoughts on “2019 US Wealth Management Outlook: The Old Guard and Fintech Cozy Up”

  1. John Lloyd says:

    This is spot on. The wealth managers that get this right will capture market share and flourish as this transfer to the millennials continues to play out.

    1. Neville Facey says:

      Hi April,

      I am not sure I entirely agree with your conclusions regarding the old guard and fintech. My view is that more and more investment will be automated via an app.

      I am part of a group that made our own machine learning Quant trading program. We have two ML algos in service with first returning 0.5% per day and the second more aggressive at 1% per day.

      While we are a new entity and small cap, our system in scalable and handles risk in real-time.

      Why I differ from your conclusions is the fact that we are currently developing the above investment app that will allow the user smartphone account access to set risk tolerance and select the various automated trading systems. This product is part of iraslabs integrated with the largest email and data provider.

      1. Fred says:

        Wealthy investors want to talk to humans before spending their money. An app doesn’t address that need. True wealth management is more than a risk tolerance questionnaire.

        1. Tom Green says:

          Greetings Fred,

          You may have a point, but question;

          When and if you do online banking do you prefer to speak to humans? Or do you just login and get busy?

          1. Mark Maisonneuve says:

            Online banking is transactional and for that login is fine. Holistic financial planning means words from a human who empathizes and synthesizes. The allocation pie is a commodity part of that with a cost and value added of near zero.

            See how well login and get busy works in the next bear market. Or, when life events necessitate a conversation, probable redirection and ongoing assurance.

  2. It’s good to know that a robo-adviser may not be enough to satisfy your investment desires. My wife and I are trying to get more into investing, and we’re trying to decide between robo-advisers and wealth management. We’ll be looking further into the benefits of wealth management in the future.

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