Wealth management is an intricate process, and one that’s fraught with potential pitfalls – whether in the form of the potential for missed opportunities, market volatility, or security snafus.
The upside is that technologies of various types are being brought to bear on wrangling substantial portfolios, providing answers to the issues just mentioned, alongside new avenues for positive progress to be made.
To bring you up to speed with what’s working its magic over wealth management in 2024, here’s an overview of a small selection of innovative solutions which need to be on your watchlist.
Cryptocurrency Platforms are Still Pushing Boundaries
The integration of cryptocurrency platforms into wealth management represents one of the most dynamic shifts we’ve witnessed in financial technology. These platforms offer more than just basic trading, and are in fact defining asset diversification and risk management strategies.
Here’s why they have managed to maintain momentum in spite of the market shrinking to $2.53 trillion earlier this year:
Enhanced Security Protocols
With advanced encryption methods and multi-factor authentication, cryptocurrency platforms are setting new standards for security. Given that investment scams cost consumers $4.6 billion in 2023 alone, an increased level of protection really is something to look out for.
Streamlined Transactions
The use of blockchain technology ensures that transactions are not only fast but also transparent and immutable. While big players like Bitcoin can take up to 40 minutes, there are swifter alternatives, including Ethereum and Cardano, that offer accelerated transactions to satisfy the need for speed demanded of them by modern investors.
Global Access
Investors get the opportunity to engage with markets globally without the hassle of currency conversion or traditional banking systems.
For instance, with a crypto OTC trading platform, high-net-worth individuals can execute large trades with minimal price slippage. This capability underscores how tailored these platforms have become to cater to sophisticated investing needs.
The point here is that there’s strong demand for crypto to be included in wealth management programs by the people using them – with one study showing that 42% of clients were intending to broaden their portfolio to include this asset class, whether or not their wealth managers took the plunge on their behalf.
This is a testament to the growing trust and relevance of these digital assets in strategic wealth management – and an indicator that professionals in handling funds for high net worth individuals cannot afford to be too cautious here.
AI-Driven Tools Enable Smarter Investments
Artificial Intelligence (AI) is used across many tools in many scenarios, and represents another profound leap forward in terms of the way wealth managers and investors make decisions. This is because leveraging AI tools lets professionals enhance accuracy, predict market trends, and personalize investment strategies with unprecedented precision.
Here’s how this plays out:
Predictive Analytics
Platforms like Aladdin by BlackRock utilize vast datasets and sophisticated modeling to anticipate market changes, helping investors identify potential opportunities or pitfalls before they become apparent to the broader market.
Risk Assessment Models
Like a business needs to assess cybersecurity risks, investors have to know their own exposure to unexpected market movements.
Tools from the likes of Trendrating provide a quantitative analysis of portfolio risk, taking into account not just market trends but also individual investment sizes and the correlation between assets, thus offering a comprehensive risk score that guides investment decisions.
Customized Investment Strategies
Wealthfront’s software uses AI to personalize asset allocations based on an individual’s financial situation and goals, adjusting automatically as market conditions change or personal circumstances evolve.
It’s true that some financial service decision-makers are either on the fence regarding AI, or anticipating that it’s true value won’t be realized in 2024 – with Forbes reporting that 40% see next year as being a more likely period in which the potential of this tech will be truly unleashed.
This type of hedging is more about the wider AI market, and it does seem that there is a lot of hype that needs to be justified soon in order for investors not to get cold feet. Even so, the applications of AI to wealth management specifically seem self-evidently advantageous.
APIs Make Data More Accessible
Application Programming Interfaces (APIs) have molded modern wealth management around their fascinating functionalities, enabling a seamless flow of data between different financial systems and applications.
These technological conduits help firms enhance their service offerings and operational efficiency by integrating various functionalities into a single platform.
Here’s what you need to know:
Data Consolidation
APIs allow wealth managers to pull in financial data from multiple sources into one unified interface, making it easier to manage client portfolios comprehensively. Solutions from the likes of NetDania are breaking new ground in this regard – enhancing the experience for all parties involved in wealth management.
Automated Compliance Checks
By connecting with regulatory databases, APIs can automate the compliance process, reducing errors and saving time. Given that non-compliance resulted in close to $5 billion in fines last year, there’s no reason to leave this to chance when APIs are at hand.
Enhanced Client Experience
With API integrations, clients can enjoy features like real-time portfolio updates and personalized alerts on their mobile devices or desktops.
Final Thoughts
These technologies might not always be the bedrock of forward-thinking wealth management, but that’s the position they hold at the moment, so clueing yourself into their intricacies will put you on a firmer footing, no matter your financial plans in 2024.
