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WealthTech – Everything you need to know

WealthTech d-tech-educate

The words “wealth” and “tech” have come together to give rise to a new generation of financial technology companies that create digital solutions to transform the investment and asset management industry.

WealthTech is one of the most popular verticals within the FinTech space. In many ways, the sector has transformed the way advisors and consumers approach wealth management. It has created a new generation of financial technology companies that create digital solutions to transform the investment and asset management industry and bring new challenges and opportunities to the market.

But the question remains – what is WealthTech?

What is WealthTech?

A good way to start getting to know the wealthtech sector is to provide clear definitions for the concepts under consideration. To begin, we will provide a definition of wealth management in general, which is an investment advisory service provided by financial advisors to their wealthy clients to resolve or improve their financial situation.

Such services cover tax planning, wealth protection, estate planning, succession planning and family governance, estate structuring and planning. The primary goal of advisors is to assist their clients in growing, preserving and protecting their wealth.

WealthTech’s definition refers to the use of innovative technologies such as Artificial Intelligence and Big Data to provide an alternative to traditional wealth management firms, with the aim of making wealth management and investment services more efficient and automated.

WealthTech has proven increasingly popular over the past few years as wealth management has adapted to major changes, including greater regulatory responsibilities and compliance requirements, shifting customer tastes and expectations, and increased competition from tech-savvy start-ups that are continuing to both threaten and transform the investment-management business model.

WealthTech Industry Solutions and Services

WealthTech covers a range of services aimed at improving the way companies and individuals manage and invest their finances. Let’s take a look at the most prominent solutions.


Perhaps the most popular form of WealthTech, robo-advisors offer financial advice or investment management online with little to no human interaction. This automated service uses machine-learning algorithms to determine the ideal investment portfolios for customers, based on their risk preferences. By driving down fees and pursuing a much wider audience than traditional wealth advisors, robo-advisors are able to generate revenues through lower margins and higher volumes of transactions.


This is another version of robo-advisors that have also proved highly popular in the sector. Companies within this category specialize in managing consumer’s retirement savings. Robo-Retirement services differ from human financial planners in that these platforms create retirement portfolios, manage assets, provide strategies, and recommend plans generated by a computer system.


Micro-investing allows consumers to save, deposit and invest a much smaller amount of money than has traditionally been the case. It’s possible to both automate the process, authorizing the platform to manage your portfolio based on your personal preferences, or you can choose your own EFT’s and stocks. Given this option, micro-investing provides a more interactive experience than using a robo-advisor.

It’s common for micro-investing start-ups to have a subscription-based/ flat fee payment scheme, which has dramatically levelled the playing field in more being able to take part in investment opportunities. As well as this, more people are learning about investing as platforms tend to guide you with recommendations and explanations.

Digital Brokers

Digital brokers are online platforms and software tools that enable access to stock market information and investment. A broker would normally charge a high flat fee per trade, which is why investing has traditionally only been accessible to those who are in a position to invest large amounts. With digital brokerage platforms varying in their target audience, they supply analyses and a variety of investment instruments for both experienced investors and beginners.

Within the category, ‘social trading’ has proved popular for the less-experienced market. Through this feature, users are able to shadow or automatically copy the trades that more experienced traders do.

Quant Advisors

Quant advisors are also an extension of Robo advisors. These systems actively use artificial intelligence to manage investment strategies.

Financial advisors

These companies specialize in offering financial advice over the internet based on extensive data analytics. Big data applications, as well as artificial intelligence-based decision-making, allow companies to provide accurate financial advice. However, these companies do not carry out any operations on behalf of the user.

Trading platforms

Trading platforms are for users of all expertise levels. These modern trading platforms make it easy to trade and even provide additional functionalities such as advisory services.

Algorithmic trading

Algorithmic trading enhances existing trading software by automating real-time trading. Users can extensively configure these software services according to their requirements.

Social trading

Social trading allows investors to share their trading experience. It merges the concept of trading platforms along with that of social media. Here, traders can replicate the investment models of other traders who have shared their opinions. Thus, novice traders can now learn from more experienced traders.

Investment Tools & Portfolio Management

Investment tools and portfolio management are a B2B segment of WealthTech. The typical aspects of investment tools includes comparison tools, research analyses and access to networks of advice. Portfolio management solutions help financial institutions with asset class analyses, and with the help of automation and organizations, they also increase the efficiency of most tasks.

Financial Services Software

This category is comprised of companies that provide specialized software to support the adoption of digital wealth management and investing strategies. Companies such as Plaid Technologies are included in this category, with Plaid being a software intermediary that securely connects financial application users with their personal bank accounts.

Analytics and Big Data services

WealthTech companies can provide specialized analytics services for B2B clients. Earlier, because of insufficient and unstructured data, financial services lacked reliable insights and relied on manual analysis for suggesting investments. However, with analytics and big-data services, investment decisions have become much simpler.

B2B Software Services

A large section of WealthTech startups works with investment firms. They build disruptive software that assists professionals in investment, saving, wealth, and trade-related sectors. They also provide technical support to these firms.

Cryptocurrency Exchanges

These platforms work in a very similar way to typical trading platforms, however, they base their focus on crypto assets. Although many trading platforms already allow trading cryptocurrencies, it is these specialists that make them their core.

Lending and crowdfunding

These participative financing systems are not new, but they have been introduced into the WealthTech ecosystem to complete its offer and reach more users. 

The WealthTech Ecosystem

In this way, we can see how the WealthTech sector is composed, differentiating its initiatives and companies between those with a B2B focus on advanced technology services for professionals and companies specialized in investments, wealth and savings management, and others aimed at to the B2C end-user adapted to the needs of the standard user. 

Thus, previously unthinkable services have emerged reinventing the way of working with respect to investments and modify the rules of the game in the financial sector, composing a Wealthtech ecosystem that is organized by different types of activity and services:

  • Marketplaces: Platforms that combine information on investments in such a way that they facilitate activities both in investment funds and in assets of all kinds.
  • Investment tools: Companies in this category have created a series of digital tools to, for example, monitor portfolios, create notification alerts for setting goals, and manage investment planning.
  • Compliance: It is the Wealthtech area, in charge of ensuring regulatory compliance within the activities of the sector.
  • Financial advisors: These companies are specialized in offering advice through the internet. They advise their clients by facilitating decision-making but do not carry out operations.
  • Robo advisors: These digital tools perform automated operations on behalf of the user or client. They are passive management firms that invest in all types of instruments according to the configuration chosen by the user.
  • Quant advisors: Born after the robo advisors, these platforms use artificial intelligence and machine learning to actively manage investment strategies.
  • Trading platforms: they are aimed at users of all kinds, from experts to “amateurs”, serving as a digital platform to trade in real-time with a multitude of different functions.
  • Algorithmic trading: Starting from the execution base present in the trading platforms, software that automates the trading actions operating in real-time has been created.
  • Social trading/investment: They are born as a social extension of trading platforms, being able to share experiences and opinions with other traders or replicate their investment models. They can be understood as a way to merge and bring the reality of social networks to the area of ​​trading and investments.
  • Micro investing: Closely related to Fintech initiatives such as lending or crowdfunding, this area is specialized in promoting savings and investment through micro-credits or small investments.
  • B2B software providers: A large category of startups and technology companies specialized in providing digital solutions of all kinds to professionals in the investment, savings, wealth and trading sectors. They develop disruptive software and applications to be used in the sector at the same time that they provide technical and technological support to investment firms.
  • Analytics, big data: Analytics providers highly specialized in providing investment data analytics services, generally with a B2B profile.

WealthTech has not only transformed the investment area but it has totally disrupted the way of understanding modern finance and the functioning of the economy, democratizing certain activities that were previously exclusive to experts and promoting knowledge and efficiency in financial processes.

The Impact on Wealth Management and the Financial Advice Industry

Wealthtech has grown exponentially in recent years, and thus wealth management in particular and the financial industry, in general, have been consistently transformed. Platforms and solutions that use technologies like Big Data and Artificial Intelligence provide a real and often more cost-effective alternative to the services of traditional wealth management firms.

This is why many large companies that recognized the trend have created their own proprietary tools or have collaborated with fintech businesses to have them developed.

Still, especially for high-net-worth individuals (HNWIs), wealthtech without a human component is limited to those with a pronounced DIY attitude. What seems to remain a very important success factor in the financial advisory business is personalization. People have emotions and insecurities that need to be addressed, a quality that no machine can yet provide.

At the same time, technical expertise alone is no longer enough for a financial advisor to attract new clients and bind existing ones. The key is to focus on what sets us apart as human beings from the technology and develop these particular skills.

Future Prospects

Considering the changes that wealthtech has introduced to the financial sector up to this point, we can certainly look forward to new and exciting innovations that the future has in store for us.

It’s plausible that wealthtech will eventually replace financial advisors. However, no one can say if or when this moment will arrive it might be a couple of years from now, a decade, or even longer than that. Therefore, let’s instead focus on what some of us can already see on the horizon.

First, data security must become the number one priority for wealthtech providers in order to prevent breaches. Every company that misses out on this is likely to eventually become less relevant.

Predictive analytics technology is critical to wealthtech company survival because it helps to win insights into client behavior and their needs so they can improve services and products. Several found that ”asset management firms with predictive analytics achieved an average 11% increase in the number of customers in the past twelve months.”

What’s more, cloud computing will remain a major trend in wealth technology because it provides for sustainable growth. The dawn of blockchain technology has created new asset classes and will continue to do so. And lastly, quantum computing will help wealth managers deal with information overload and improve investment decision in the long term.

The Emergence of Digital Assets 

There’s still a lot of debate about the future, viability, and utility of digital assets – with proponents and opponents alike debating use cases, moral and ethical issues, and environmental impact – but one thing is clear: they are here to stay.

The past few years have seen crypto-culture continue to cement the “asset” class’s position as the king of speculative assets. Despite some countries starting to regulate or ban cryptocurrencies, in some quarters there is a rising acceptance of digital assets. With increasing adoption rates of contactless payments, easy transactions, and investments, digital assets seem to have gone mainstream with multiple commercial opportunities for financial institutions and investors.

Hybrid Robo Advisory

A hybrid robo advisor is a digital investing service that typically combines a professionally managed account (through the help of a robo advisory service) with access to financial guidance or planning provided by human advisors. The retail market is witnessing a rise in hybrid robo advisors that combine the best of both worlds in an easy-to-use platform that makes processes affordable, accessible and attractive to new-age investors.

By collaborating with wealthtech providers and using robo advisory services, traditional wealth managers can increase efficiency, cut costs and scale capabilities. 

However, before relying entirely on hybrid robo advisors, the industry will need to address challenges such as data privacy and cyber threats, as well as issues related to the size of investments and the deep expertise required to develop and manage robo-advisory competencies. 


Fintech is unarguably a more sustainable option than traditional financial organisations. Moreover, with digital banking to paperless statements, the move to digital is a continuing trend. 

The robo advisory phenomenon has led to the rise of socially responsible investing (SRI) or impact investing. SRI is the practice of investing in companies that operate according to certain ethical guidelines, or provide products and services that either follow certain guidelines or address different social issues.

These ‘green’ investing apps are encouraging investors to put their capital to work and save the planet, with the pandemic further strengthening the mindset that managing social and environmental challenges is essential.


Summing up mentioned above, we can say that currently market witnesses the wealth management sector changes and the evolving WealthTech contributes a lot to the approach to interaction with clients, which is growing more client-centric and personalized, as well as to adding value to the offerings made by wealth managements and advisors due to collaboration within the ecosystem, and not to forget improved cybersecurity possibilities along with compliance to regulatory standards and requirements.

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