Wealth management in 2030, according to execs at firms like Merrill Lynch, Wells Fargo, and Betterment: AI-driven investments, concierge-like advisers, and holograms to reach more clients
- Business Insider is polling experts around Wall Street to learn what different areas of finance will look like in 2030.
- For this story, we talked to execs at wealth management giants spanning wirehouses, robo-advisers, and online brokerages.
- Executives largely see the industry dominated by fewer large players than today; wealth managers (who still exist) regularly harnessing artificial intelligence; and advisers taking on a more concierge-like role.
- When the CFA Institute surveyed some 3,800 people across the investment industry, 54% of wealth managers, advisers, and planners said they expected their jobs to "substantially" change in the next five to 10 years.
- "The evolution of financial advisers will look a lot like that of travel agents," predicted Andy Rachleff, the chief executive officer of robo-adviser Wealthfront. "They will be forced to go upmarket."
- Danielle Fava, director of innovation at TD Ameritrade Institutional, sees voice-enabled search functions, paired with machine-learning technology, becoming commonplace at advisory firms.
- Visit BI Prime for more wealth management stories.
The year is 2030.
The first standalone robo-adviser launched two decades ago. The sweeping industry agreement known as the broker protocol was created nearly three decades ago. Investors recall the great commission wars of 2019, and the early morning that November when Charles Schwab said it would buy up TD Ameritrade.
Meanwhile segments across the wealth management industry are now, in 2030, dominated by fewer large players than it was a decade ago, and wealth managers (who still exist) regularly harness artificial intelligence to help their clients plan out their financial lives.
At least, that's what we found in our survey on the future of the industry.
Business Insider is polling experts to learn what Wall Street will look like in 2030. In recent weeks, we asked executives at eight wealth giants - UBS, Wells Fargo, Merrill Lynch, Betterment, Wealthfront, BNY Mellon, TD Ameritrade, and Charles Schwab - to examine what shape the business, already fast-evolving, may take in a decade.
Executives overwhelmingly see artificial intelligence as heavily aiding advisers in the year 2030. And advisers as a whole will take on a far more concierge-like role than that of investment manager, or stock-picker (tasks that respondents say will be largely automated for clients.)
A new kind of adviserPredictions for what the industry will look like in 2030 coming from firms that deploy thousands of financial advisers around the US and beyond differed, predictably, from those with digital-first services. Still, it's not so cut-and-dry; and many agreed human advisers' roles aren't going extinct.
"The evolution of financial advisers will look a lot like that of travel agents," predicted Andy Rachleff, the chief executive of the robo-adviser Wealthfront that's doubled down on an automated, adviserless approach. "They will be forced to go upmarket serving older, wealthier clients who value in-person interaction."
The young professionals of 2019, meanwhile, will look increasingly over the next decade to mobile services for help in managing their money, Rachleff said.
Andy Sieg, the president of Merrill Lynch Wealth Management, among the largest US wealth managers, said advisers of the future "needs to be able to offer highly personal service, enhanced by a digital experience, and advice that takes into account more of their clients' financial lives."
By 2030, Sieg also expects that just about all of the firm's advisers will be part of teams, up from around the 80% of advisers who are today.
For now, at least, the broader space is crowded and fiercely competitive. Purely digital and hybrid entrants are challenging legacy players with deeply institutionalized models, and scale is becoming increasingly important.
"Being able to compete and offer a vast array of client services is becoming table-stakes as client needs and complexity grow," said Jim Hays, the president and head of Wells Fargo Advisors, who added that robo-advisers are "here to stay."
The broader industry is bracing for more change. When the CFA Institute surveyed some 3,800 members and candidates across the investment industry earlier this year about the future of their roles, 54% of wealth managers, financial advisers, and planners said they expected their roles to "substantially" change over the next five to 10 years.
Their responses stand out. Of the 14 financial segments surveyed, that group's expectation trailed only those in information technology positions, at 77%, and were in-line with respondents in risk analyst or manager roles.
Meanwhile 4% of that group do not think their role will exist at all in five to 10 years.
At the same time, talent in the industry - comprised of players like traditional wirehouses, independent registered investment advisers, and retail banks - is aging.
The average US financial adviser is 52 years old, according to research provider Cerulli Associates, and those under 35 comprise just 9% of the total workforce. And over the next decade, some 37% of advisers overseeing about 39% of industry assets are expected to retire. The majority of those retirements are expected to come from wirehouses and independent broker-dealers.
New tech's place in the industryWealth management firms are set on the idea of artificial intelligence aiding human advisers and clients alike in decision-making, but they're playing in a business that's slow to change - and one that can get caught up in embracing buzzwords.
Even as traditional retail and commercial banks globally have invested $1 trillion in technology over the last three years, only half of banks are making meaningful headway in transforming their businesses, according to a June report from the consulting firm Accenture.
Still, companies across the wealth spectrum are betting that machines imitating human behavior is going to transform advisers' lives when it comes to finding clients, anticipating their needs, and helping them plan.
"With the proliferation of artificial intelligence and cloud computing, many investment management processes currently implemented by advisers will likely be fully automated using algorithms and machine learning," when it comes to areas like investment research and portfolio rebalancing, said Ben McGloin, the head of advice, planning, and fiduciary services at BNY Mellon Wealth Management.
And Jon Stein, the chief executive of the robo-adviser Betterment, sees a future of managing money that's even more automated than it is today, and would expect budgeting tools to fade away.
"You won't have to think about how much money you should keep in your checking or savings accounts," he said. "You shouldn't have to think about which account to pay your bills out of."
The world's largest wealth manager, meanwhile, has its eyes on how advancements in this area can aid advisers.
"Advisers empowered by advanced analytics for prospecting, advising, and communicating will be more productive and more effective," Jason Chandler, the head of UBS's US wealth management business, told us.
Artificial intelligence has to some degree showed up at TD Ameritrade, which rival Charles Schwab is set to acquire in a $26 billion deal expected to close during the second half of next year.
Business Insider reported earlier this year that the Omaha-based firm is building out a Netflix-like recommendation system, powered by AI, in which clients are served news and information based on their trade data and holdings.
Danielle Fava, the director of innovation at TD Ameritrade Institutional, is now thinking about other use cases. By 2030, the industry should expect that AI can aid advisers in providing their clients with "extreme personalization" in how and when they communicate and making investment decisions, Fava said.
She also sees voice-enabled search functions, paired with machine-learning technology, becoming commonplace at advisory firms.
Fava added: "While video conferencing is already popular, in 10 years I expect we will be leveraging augmented reality and holograms to speak with far-flung clients."
Charles Schwab has its own eye to advanced analytics. Bernie Clark, the firm's head of adviser services, expects that by 2030, "advisers will be using data and predictive analytics more prominently to help inform their client service experience."
That sentiment is echoed across wirehouses. Jim Hays, the president and head of Wells Fargo Advisors, told us that "predictive analytics built on artificial intelligence and paired with natural language recognition will make investment choices easier."
