How technology is changing the wealth management industry

21 August 2019 Andrew Möller, Director and Chief Executive Officer, Citadel
Andrew Möller, Director and Chief Executive Officer, Citadel

Andrew Möller, Director and Chief Executive Officer, Citadel

One of the most significant trends in the wealth management industry in recent years has been increasing adoption of technology as both a facilitator and a driver of growth.

In particular, the emergence of automated investment services that make use of artificial intelligence (AI) has given rise to the provision of automated or “robotic” advice (robo-advisors) helping to democratise the industry and provide access to a far larger proportion of the population than before.

Two streams

Essentially two streams have formed in the approach to using technology – pure robo-advice businesses which are technology platforms offering a simpler form of access to wealth management and the more traditional human advice firms which use technology to enhance and supplement their services. In this second context, AI can be used to provide analytics and insight into customers, to assess performance and even to implement decisions in data-driven companies.

But AI is not without its detractors. Discussion about AI often involve fears about job losses and one of the first questions people ask when you start talking about it is: “Will robots take my job?” While it’s hard to predict where the industry will be in five or ten years’ time, we see AI as augmenting and enhancing human capabilities rather than replacing them.

In spite of all their number-crunching abilities, computers still lack the nuancing skills of humans, the ability to ask the right questions that will tease better – or more revealing – answers out of clients so that we are able to provide them with exactly the right solution that suits their specific needs.

Optimising resources

At Citadel, we are implementing AI in a way that frees our advisors to add maximum value – to perform at their peak at all times rather than to perform certain functionary roles as well as providing top quality advice. We combine the human element and the digital element to allow for a uniquely personal service. This facilitate greater individual interaction and we are able to maximise client contact.

By removing the friction from the process, including costly and clumsy legacy issues, and allowing for straight-through processing, we are able to offer an improved service to clients. At the same time, advisory partners are freed to utilise their time to provide more advice and develop an even deeper understanding of client needs and requirements. This means the business can utilise its resource optimally and deliver a more personalised service.

Wealth management and financial advisory businesses are increasingly being judged by right brain metrics, or the human touch that fintech and robo-advice are simply unable to replace. And beyond that, there is a need for high-touch conversations that only people can provide.

Advisors are taking on the role of a financial life-coach, walking beside clients through each of their life-changing moments and decisions, whether these be choosing where to send children to school, how best to support aging parents, or even deciding where to live. Simultaneously, advisors need to be alert to changing environmental conditions, helping clients to mitigate any unforeseen risks, manage their debt burden before it becomes unmanageable, and assist them in strategising for successful intergenerational transfer of their wealth.

Fund performance

Industry outsiders often think that we can use tech technology to enhance fund performance, but that’s a false dream. Technology can’t find more or better opportunities on its own. New data leads to new insight, which could lead to new strategies or improved signalling. But there’s no guarantee that these new strategies will be consistently successful.

The bar is already very high for new technology to deliver new sources of alpha. Today’s managers hardly use a pen, paper and a calculator to arrive at their strategies. Fund managers have always embraced technology and, while it can lead to improved efficiency to find alpha and reduce costs, the constraint lies in the lack of data.


Technology is allowing for greater efficiency and productivity within the wealth management industry thus allowing for a greater focus to be placed on servicing clients and addressing their individual needs. At the same time changing client needs and an altered landscape are driving demand for more extensive advice. Happily, this is being facilitated by the technological advances.

Technology and AI are significantly changing the way wealth managers do business, however, there is no “one size fits all” solution. Different companies will implement AI and technology a greater or lesser degree.

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