have created the WealthTech Radar in collaboration with Fincite.
The wealth management of tomorrow is already taking shape today. Almost every day, new companies are emerging that want to revolutionize our industry - all with the goal of making investment advice more digital and thus more efficient. But how do we keep track of all these trends? Which will be forgotten in a year's time, and which will remain?
In order to give you an answer to these questions, we have created this radar and analyzed a total of 21 trends, grouped them into 3 categories and divided them into different maturity levels.
We hope you enjoy reading it and look forward to your feedback.
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Fractionalization and tokenization provide access to asset classes that were previously only available to wealthy clients. Below, we describe the assets in which we have observed the greatest changes.
Consulting and asset management that are tailored to your specific needs and your specific financial plans are considered ‘top-tier’ investment services. Such services are often only available to clients with assets worth several millions of euros or more. Investors with smaller asset portfolios are often offered products ‘off the shelf’ and these rarely offer any extra value than simple ‘do-it-yourself’ portfolios. Services such as tailoring to meet specific needs, and therefore customizing and personalizing investment strategies, can be made accessible to a wider target group through automation.
We believe that venture capital should be accessible to everybody. Venture capital funds offer an attractive risk/return portfolio and an extra opportunity for diversification. Investors have previously only had a few opportunities to invest in venture capital growth. Modern crowd-investing approaches sometimes have a disadvantage compared with equity participation in terms of product design. Investments via subordinated loans often only offer a fixed interest rate and no share of the success, which is why the prospects for returns can be lower.
Lennard Fischer, Co-Founder & CEO, inVenture
The tokenization of assets will change wealth management fromthe ground up. Advisers will be able to offer 360° consulting forall asset classes. Consulting will become even more importantfor those aged 50 and above, as it will enable them to overcome technological barriers. Financial institutions will achieve long- term success with a hybrid approach. The human factor will continue to be important as a means of guiding investors towards optimum solutions.
Prof. Dr. Paul P. Momtaz, TU Munich
Ten years ago, I would probably have bought the idea of fractional real estate. Today, however, I see too many hurdles for too little added value. The hurdles include establishing property rights, tax regulations, the complexities of corporate law and the complicated regulation of property management.The question here is whether the promised returns on a tokenized property have enough potential compared with property investments to justify the high cost.
Jan Sprengnetter, CEO, Sprengnetter Group
The democratization of financial investment has made great advancements in Germany in recent years. Commission-free trading, savings plans from just a few euros, fractional tradingand attractive interest on credit balances are just the beginning.The potential for the leading providers in Europe is still huge —in terms of both acquiring customers and creating new products. I am very much excited about and looking forward to the next few years.
Ingo Hillen, Founder & CEO, sino AG
In consideration of the fact that shares and bonds will probably not attain the same returns as in the last decade, asset managers are trying to diversify these asset classes in order to realize new sources of returns, particularly in the private markets segment. In the past, investments in private markets were too difficult for many people to manage due to the great administrative burden.
Oliver Bussmann, CEO & Founder, Bussmann Advisory AG
Investors do not need advisers to buy and sell crypto currencies. It makes it a little easier, though, if you ask questions such as: “Which tokens are the right ones for me?”, “which investment strategy should I choose?” or “do I need a certificate to trade or ” not?” — an adviser is essential then!
Prof. Dr. Philipp Sandner, Head of Frankfurt School, Blockchain Center
Digital assets find their way into wealth management in various forms: as their own asset class, as is the case with crypto currencies, or even in the form of digital securities. One way or another, they’ve arrived and they’re here to stay.
Simon Seiter, Head of Digital Assets, Hauck Aufhäuser Lampe Privatbankiers AG
With the simple concept of AI vs. IFTTT, simple, individual decisionsand rules — which would otherwise take lots of time to handle manually — can be automated. This means that investors, asset managers and advisers are able to concentrate on more complex investment and wealth planning activities that generate real value.
Stefan Post, Founder & CIO Fincite GmbH
‘Financial health’, or more generally, ‘financial prosperity’ is a key development. Unfortunately, more than 94% of all people in Europe are under financial stress. This stress has been proven to make people ill. It prevents them from enjoying their lives and investing their energy and creativity into transforming our economy and society. There is an enormous need for new digital services in order to assist people with their day-to-day lives and help them to develop a new, healthy relationship with their finances.The potential is huge. And all efforts to invest in this issue are a great step towards the SDG/ESG targets.
Franziska Weissbach, Sustainable Innovation, Strategist & Financial Well-Being Activist
The ‘fractional asset’ is the bread and butter of ‘mass personalization’ in wealth management.
Sebastian Hasenack, Head of Wealth Management, DJE Kapital AG
Only those who are able to achieve premium and, at the same time, scalable advice across all age groups will secure fiercely contested market shares in the long term. This will be the greatest challenge in the IFA market in the coming years and requires a hybrid advice model that combines a personal relationship with an adviser with all the advantages of WealthTech software. This means that in the future, affluent customers will also be able to benefit from individual holistic investment advice on a variety of asset classes, which was previously only possible in the personnel-intensive HNWI/UHNWI segment.
Roman Schwarze, Chief Digital Officer, BCA AG
There is no free lunch. Except, perhaps, for those who have found a trustworthy, human adviser for their assets who provides high quality services and remains neutral in relation to their client’s interests. A premium service with a price to match. If it seems like it doesn’t cost anything, this poses the question of how the adviser is making money. Hybrid advice enables highly individualized advice at a consistently high standard, even for relatively small investments.
Sustainable investment is the topic that has motivated the financial industry in Europe the most in recent years. We are being confronted by legislation that is open to interpretation and, as a result of this, highly individualized and therefore non-comparable solutions are being developed in many different places. I believe that one of the greatest challenges for asset managers and WealthTech providers lies in navigating a labyrinth of rules and regulations without losing sight of actual customer requirements and one’s own value adding key skills.
Alexander Sperlich, Head of Strategic Business, Development at Morningstar
Financial planning is only the first step. Ongoing consulting concepts ensure that clients remain confident, as the actual challenge lies in holding on to the investment!
Iven Kurz, Founder & CEO, Evergreen
Affluent clients need intuitive reporting to give them an overview of all their assets and enable them to make informed investment decisions. Alternative assets are just as much of an integral part of professional investment consulting as comprehensive reporting.
Paul Kammerer, CCO, Fincite GmbH
Technology democratizes asset management by modernizing previously complex, analogue processes and making them simpler and more efficient through digitalization. But the issue of trust also plays a key role. Hybrid advice is therefore the future of asset management. It enables advisers to give their clients better financial advice. Hybrid advice creates more wealth for more people.
Valentin Bohländer, Co-Founder & Chief Product Officer, Finvia Family Office GmbH
Personal contact between clients and advisers continues to play a key role, particularly in relation to complex aspects of financial planning. Equipped with improved digital processes, advisers can provide advice in the best, most efficient way, forming the basis for a sustainable client relationship.
Hauke Ole Hansen, Deputy Manager Business Management Direct Sales, Joh. Berenberg, Gossler & Co. KG
Custodian bank infrastructure around the world is still very diverse. Many banks with PSD2-type interfaces do not provide any transaction data. Services that collect this through OCR or other methods often require manual data quality assessments and entail high costs per portfolio. For portfolios of less than a million, this is expensive. The smooth, cost effective and straight forward aggregation of all portfolios remains an ‘unsolved problem’.
Friedhelm Schmitt, Co-CEO und Founder, Fincite GmbH
The need for better digital financial planning is underpinned by the fact that more and more clients are using different platforms for their financial services and investment requirements. Private clients have moved away from ‘monogamous’ banking relationships to become multi-bank users and now multi- platform users, which includes the use of online loans and online brokerage/investment platforms.
Martin Korbmacher, Founder & Managing Director, Event Horizont Capital & Advisory GmbH
Art is one of the oldest stores of value in the world and it is a very attractive asset class. Previously it was only accessible to (U)HNWIs with corresponding capital, knowledge, and networks and, in the absence of regulation, professional investors could not invest in it. Fractionalization and tokenization now make investing in art and other material assets more widely accessible; as a result, this is quite rightly seen as the democratization of these asset classes. With the Act on Electronic Securities (Gesetz über elektronische Wertpapiere) and an appropriately structured security, institutional investors can now invest too. Tokenization doesn’t just make material assets such as art more broadly accessible; it even makes them tradeable.
Svenja Heyer, Co-Founder, Arttrade GmbH
Investment around the world is undergoing huge change since ETFs and online brokerage became established on a mass scale. With the WealthTech Radar, we make sense of the key technological trends that are driving this change and take a critical look at the status quo.
Ralf Heim, Founder & Co-CEO Fincite GmbH