Challenges in the Wealth Management Industry and How can Tech Reshape it

Without an iota of doubt, the Covid-19 period had the greatest impact on wealth management. As a result, document sharing online became prevalent, forcing employees to work online rather than meet face-to-face.

It is becoming increasingly challenging for advisers to provide their customers with sound investment advice due to rising levels of uncertainty and risk-related charges. To top it all off, the amount of change in the wealth management sector is further compounded by rising regulatory constraints, novel business models, and competitive trends.

What is Wealth Management and Why is it Important?

Wealth management takes place when a high/ultra-high net worth client consults a financial adviser to develop a strategy that will improve their existing financial status. A company or person without wealth management suffers from financial mismanagement which causes financial stress and, possibly, debt. We all require assistance at some time.

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Common Challenges Affecting Wealth Management

The ultimate purpose of wealth management is to provide security and peace of mind so that you may enjoy the present moment to the fullest.

However, some factors tend to disrupt wealth management and we discuss them below.

1. Science Vs Human

According to a MagnifyMoney poll, 63% of Americans are receptive to adopting robots as financial counselors.

But keep in mind that this does not imply that robots will replace people as advisers; rather, it highlights the fact that many businesses have adopted the strategy of deploying robots as advisers.

Robot advisers have become more commonplace over the last few years. Some businesses employ sophisticated algorithms to generate individualized financial plans and asset allocations as well as to direct investors to pertinent studies.

Some companies have also developed tools and algorithms that produce real-time data analysis and suggestions for individual clients’ investments.

2. Newer Asset Class

With the gradual dominance of assets like cryptocurrency, Sustainable and responsible investing and ESG funds in the financial sector, investors seek newer avenues to keep up with these trends.

The wealth management industry needs to adapt to this ever-changing demand, considering these newer asset classes are getting acceptance all over the world.

3. The Re-wired Investor

Younger investors’ decisions to buy and use wealth management services are influenced by the changing attitudes and expectations that this generation of investors brings to the Wealth management business.

The Re-wired Investor views advice differently than prior generations and anticipates engaging with advisers in a new manner. Investors, for example, no longer wish to be addressed as a segment but as distinct people with distinct interests and preferences.

Instead, they expect to receive advice tailored to their unique circumstances.

They also want to maintain control over their financial life, grasp the information they are given, and make critical decisions for themselves.

4. Aging Advisors

Two significant phenomena that will have an influence on the wealth management sector in the coming years are the wealth transfer from baby boomers to their children and many advisors reaching their retirement age.

There are further difficulties brought on by the aging of the advisor population. First, the deteriorating client-advisor relationships are a result of the widening age gap between advisors and the Re-wired Investor, which makes it difficult for some advisors to comprehend and adapt to the demands and preferences of a younger generation of investors.

Second, many advisers have been reluctant to use mobile channels, accept new technologies, and transition to new advising models that balance the use of both human and scientific knowledge. This problem is difficult to solve, and many established WM companies engage in training without seeing a big return on their money.

5. Regulatory Burden

Due to the range of their product offerings, WM firms have always had to manage operations that are inherently risky. These products could include financing, capital markets, and investments.

Additionally, businesses like private banks and their parent corporations now face particularly high expenses related to these risks due to the delicate nature and high profile of their client base.

The regulatory environment has changed swiftly since the 2008 financial crisis, and its full impact is yet unknown.

It is evident that the regulatory burden put on WM firms, their advisers, and their clients is becoming more complicated.

6. Retirement Age of Investors

A recent study shows that retirement age has been gradually declining. The trend here is that investors are preponing their retirement and yearning for early retirement.

Many investors only seek reassurance that they will be able to maintain their present way of life in retirement. This leads to increased pressure on wealth managers as they need to accumulate additional wealth within shorter span.

The process of delivering that assurance, however, is no longer as straightforward as it once was due to factors like growing healthcare costs and worries about the viability of government entitlement systems.

7. Expectations

Retail investors now more than ever anticipate having the same access to potentially high-yield asset classes and techniques as wealthy, authorized investors.

The rewired investor does not wish to receive usual service anymore, as was already said. Instead, given the low-yield environment that has followed the financial crisis, ordinary investors are beginning to demand the same level of access to high-yield asset classes and strategies as wealthy, authorized investors.

In years past, several start-up businesses have joined the market in response to the demand for return and for access to best-in-class investment solutions, which until recently were only available to institutional or high-net-worth clients.

8. Macro Environment

Both the financial crisis and its aftermath have significantly altered the climate for asset managers and investors. Investors currently have to deal with a situation where there are high inflation rates, and a falling pace of economic development.

Pandemic, monetary tightening by central banks have led to uncertainty. Investors now have far less sense of direction than they had previously.

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How Digital Technologies are Reshaping Wealth Management

Traditional wealth management is far from being the only service offered by modern wealth and asset management, which includes a wide range of services.

The emphasis is on the specific needs of each individual customer. It could be a pension concept that looks to the future. Perhaps it’s the selection of the best investment and financing for one’s own property.

Financial service providers are urged to automate and digitize their operations to make sure that comprehensive wealth planning is still scalable for many clients.

Only in this way will seasoned service providers be able to resist the demands of fintech and technological giants in the future.

The fintech sector has already risen by 300% over the previous three years and is putting itself in position to seize the new market opportunity.

Because of this, today’s experts in wealth management must keep pace with these disruptors.


We become more dependent on technology as it develops. The workforce is being influenced by artificial intelligence, particularly in the wealth management industry.

We recommend that new and old businesses try to take advantage of digital tech soon.

Indium Software has been delivering critical solutions in the areas of AI, Data & Analytics, Cloud for several leading BFSI institutions. To know more about the solutions we offer, please write to us at

Author: Prashant Gala
Prashant has over 15 years of experience in BFSI Industry having worked with custodian banks, commercial banks, investment banks, asset managers, research firms and financial services firms. His expertise lies in multiple products and markets like equities, fixed income instruments, derivatives, mutual funds, hedge funds, ESG/SRI ratings, passive investment market etc. At Indium, Prashant is an integral part of pre-sales consulting team and has strengthened client relationships, domain knowledge for the team, and guides the success of high-performing teams.