In this month's Word on WealthTech we're covering AI-related announcements, partnerships, executive transitions and rising tech prices. There's a lot going on in the market, so let's dive right in!
We found a few points of interest in Orion's annual Wealthtech Survey. One big thing that came to light during the conference discussions was how poorly firms rated themselves on their technology offerings – only 45% think their technology is a value add. This was both surprising and alarming. Even worse, this result comes from a tech-oriented crowd, meaning the percentage is probably lower among the “real world” population. The problem is that we are approaching a world of 'haves' and 'have nots' for technology. Firms that crack the code with technology enable compelling advisor and client experiences that allow them to grow. Firms that do not face significant missed opportunities.
Lydia, an AI-powered behavioral financial assistant, helps financial advisors better understand clients' emotional needs and provides personalized financial guidance. This is a good example of AI getting to work on its own in key wealth management use cases. It's early days and we're holding back to see how this evolves, but it's a positive development that we're seeing well-focused AI companies attracting and gaining interest.
Our first reaction to this news is that it is disappointing to see such a creative innovator leave Envestnet. However, we are excited to see what she will pursue in the future and what Envestnet will do as well. Too many embedded customers and moving parts can make investing in innovation difficult for very large firms, but we're optimistic that Envestnet will put the right people in place to take the company in a direction that leads to better outcomes for the industry. wealth management.
Over 2,500 Euroclear customers will have access to alternative funds available at iCapital Marketplace Platform, which supports 1,445 funds through private equity, private credit, hedge funds and real assets. iCapital is often seen as easy access to alt feeder funds. But behind the scenes they have built a very important technological infrastructure for it support much more that only the universe alts. They are tying together a significant amount of investment products with the ability to build portfolios and to execute and communicate portfolios. This partnership means that a client now potentially has access to the global pool of investment assets.
Price jumps in WealthTech
This latest 'headline' is actually multiple headlines we're starting to see. Orion, InvestCloud and others are raising their prices. It's not welcome news for wealth management firms, but labor costs and hardware and software costs are rising. We are not at the tail end of rapid price increases across the industry; more tech firms will raise prices for their SaaS products in the coming months. Renegotiating contracts is a good time to ask yourself if you have the right vendor or if it's time to make a change to find better innovation for the price.
We are also making news again. We recently announced a new acquisition as we invest in expanding our capabilities to integrate marketing into the technology universe. We're taking our customer experience strategies and bringing the ability to merge marketing automation and MarTech into our customers' technology infrastructure. We believe more firms need to help advisory businesses achieve better results in their organic growth, so that's what we're doing.
However, the wealth management industry is moving in the right direction in terms of evaluating the tools that can provide the client and advisor experience. Let's keep working hard to reimagine our business offerings through technology and deliver the Orion survey next year!