1.
LET'S TALK
WEALTH,
SHALL WE?
AUTHORED BY
Kannagi Mishra

2.
If you think FinTech has disrupted the financial services industry, wait until you learn what its
very own vertical WealthTech has to offer But first, let’s begin with an introduction
WealthTech as the name suggests, is the digitalization of services provided within the Wealth
Asset management industry impacting the complete value chain, WeathTech companies offer
digital solutions on the following -
Digital
Services
Service
s
Personal
Finance
Portfolio Management
& Rebalancing
Digital
Brokerage
Risk &
Compliance
Wealth & Asset Management
One of the most dominating disruptors of the industry is the Robo Advisor, reshaping the
services of Portfolio Management and Personal Finance.
To break this down into simpler terms, Robot-Advisor is a technology platform for algorithms-
driven financial planning services with almost no human intervention. According to CNBC,
Robo-advisors have grown into an industry that managed US$460 billion in 2020, a 30%
increase from 2019. Some analysts predict Robo-advising will become a $1.2 trillion industry by
2024
Robo-Advisor
PAGE | 02 WEALTHTECH

3.
There are three business models -
B2C (Business To Customer)
Stand alone WealthTech companies providing Robo Advisor services to
the end customer for managing their wealth Such companies are either
fully automated services or hybrid services having human advisors
additionally.
E g Betterment in the US, Nutmeg in the UK
B2B (Business To Business)
A Robo for the Advisors. This model is the amalgamation of services or
in house capability within the bank Vanguard Personal Advisor Services,
for instance, is one of the major players in this area by Assets Under
Management amounting to USD 231 Bn
B2B2C (Business To Business To Consumer)
This model involves a partnership between a financial institution and a
Robo advisor.
Eg Barclay’s partnership with German firm Scalable Capital (in July 2020
J P Morgan’s partnership with Nutmeg (in Nov 2020).
Business Models
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4.
Advantages
Robo-Advisors open opportunities for mass affluent inventors to
leverage cost-efficient and readily accessible financial planning. While
professional financial planners typically charge 1% to 2% of the total
AUM of a client, most Robo-advisors charge a flat fee of 0.2% to 0.5%. It
needs no explanation that with such cost efficiency Micro-investing is
gaining immense popularity among the tech-native generations.
Robo-Advisors can help manage the growing need to rebalancing
frequently to maintain the proportions of the securities in a client’s
portfolio. Auto-rebalancing caters to the especially high need of HNI &
UHNI investors.
The algorithm can suggest ways to make tax-optimized decisions.
Clients can also invest based on their inclination such as ESG focused or
Thematic investment options.
Cost Efficiency
Auto-rebalancing
Tax Optimization
& Thematic
Investments
Limitations
Diversification of portfolio is largely limited to ETFs, Mutual Funds.
There is a lack of personalization.
Has not been extensively tested under extreme volatility and
uncertainties such as Covid-19 or a recession
Limited
Diversification
Volatile
Scenarios
PAGE | 04 WEALTHTECH

5.
Betterment
A Hybrid advisor with US$26.7
billion in AUM across 615,000
clients*.
Wealthfront
Fully digital advisory with
US$25 billion in AUM across
440,000 clients*.
*As of May 2021
Nutmeg
First and the largest fully
digital wealth manager in the
UK with over 140k customers
and it’s regulated by FCA
Scalable Capital
This German unicorn has
partnered with Barclays to
offer B2B service in UK
through the collaboration.
Bambu
B2B wealth management digital
firm, HSBC partnered with
Bambu for its robo-advisory
services in Singapore
Kristal.AI
A hybrid B2C WealthTech that
leverages advanced algorithms
and human strategies to assist
users to invest in a variety of
financial products.
India
Kuvera
Fund based Robo-services with Aum of US$1.97bn.
As per Fintechnews Singapore, AUM in Robo-
Advisor segment has grown to US$8.8bn in 2020
B2C start-up business model targets investors with small AUM, which eventually may not
be a profitable business model. Partnering with bigger financial institutions or expanding
AUM by other strategies will pave the way for scalable & profitable business.
A fully automated solution will not offer as much flexibility as a professional advisor.
Traditional investment advisors will always remain on the forefront; however, a hybrid
business model will be the most desirable business model in future.
According to a report from CNBC, some analysts predict Robo-advising will become a $1.2
trillion industry by 2024.
Leading Stand-alone WealthTech players across the globe
USA UK Singapore
Singapore
Additiv
Additiv is a wealthtech company that is
renowned for its digital wealth
management innovations
PAGE | 05 WEALTHTECH

6.
Digital Brokerage
Another emerging segment within WealthTech is the Digital Brokerage Online platforms and
software that enables consumers to access the stock market and investment vehicles.
Advantages
Discounted Brokerage - Unlike the traditional platforms that charge a higher flat fee per
trade, digital platforms offer discounted brokerage across all asset classes
Easy access to various Digital Asset Classes - Cryptocurrency, Initial Coin Offering, Digital
Tokens
Social Trading - Allows naïve or inexperienced investors to shadow an experienced trader
Quick and easy Client Onboarding
They offer Open Market Trading Education to New Investors
Conclusion
As the shift of wealth paves its way from baby bloomers to Gen X, millennials Gen Z,
the need for digital solutions in the Wealth Asset Management industry is growing
fast. Not only new age investors but Wealth managers are also increasingly looking
towards technology to enhance existing solutions or create new solutions altogether
CoinSwitch Kuber
An app based
cryptocurrency digital
exchange platform
exclusive to Indian retail
investors.
QUOINE
First global cryptocurrency
exchange officially licensed by the
Japan Financial Service Authority It
currently processes annual
transactions worth over USD 50 Bn.
eToro
Israel based social trading and
multi asset brokerage
company that focuses on
providing financial and copy
trading services.
PAGE | 06 WEALTHTECH

7.
References
https://www.cnbc.com/2021/04/12/why-robo-advisors-may-never-replace-human-financial-
advisors.html
https://www.capco.com/-/media/CapcoMedia/PDFs/Capco_Partnering-with-robo-
advisors_blog.ashx
https://www.roboadvisorpros.com/robo-advisors-with-most-aum-assets-under-management/
https://ibsintelligence.com/ibsi-news/top-4-wealthtech-companies-transforming-the-european-
market/
https://www.cnbc.com/2021/04/12/why-robo-advisors-may-never-replace-human-financial-
advisors.html
https://storm2.com/what-is-wealthtech/
https://internationalbanker.com/brokerage/wealthtech-a-game-changer-for-wealth-management/
https://assets.kpmg/content/dam/kpmg/cn/pdf/en/2021/03/digital-wealth-management-in-asia-
pacific.pdf
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