2024 Outlook for the Wealthtech Industry

The wealth management industry is experiencing rapid change, and it shows no signs of slowing down in 2024. As we welcome in a new year, WealthTech is poised for some groundbreaking shifts. Let's delve into the trends and predictions that are likely to shape the WealthTech space in the coming year.

Artificial Intelligence

Artificial intelligence (AI) dominated many sectors in 2023 including the WealthTech industry, and it’s likely to dominate even more in 2024. AI is already being used in many diverse ways throughout the WealthTech industry, perhaps most notably in the development of robo advisors.

Robo advisors are set to become even more advanced and widely accepted in 2024. 42% of investors aged between 18 and 34 are already comfortable using the technology to support their investment decision making, 46% see them as the future of investing, with 34% preferring to use a robo-advisor over a traditional financial advisor.

In 2024, robo advisor services will become even more advanced, moving from simply offering simple portfolio recommendations to far more personalised advice. This could include making specific investment recommendations based on investors’ goals, prompting investors to rebalance their portfolio and monitoring diversification.??

2024 is also likely to be the year we see the mainstream roll out of AI tools. For example, investment giants Blackrock and Morgan Stanley already have plans to release generative AI technology in 2024 to improve customer experience and results. AI is also likely to be used by wealth management firms to improve general business efficiency, freeing up time and resources to focus on client retention and results.?

Hyper-Personalisation for Enhanced Customer Experience

As general investment education and advice becomes more accessible, many wealth management firms find themselves under pressure to go above and beyond for their clients. This is a trend likely to increase in 2024 as wealth managers must offer a more holistic and customised approach in order to clearly demonstrate their value to clients.?

Hyper-personalisation goes beyond the generic one-size-fits-all approach to financial advice. It's about recognising that each investor is unique, with distinct goals, risk appetites, and life situations. Think of it as a financial concierge attuned not only to your risk appetite but also resonating with your values and individual aspirations.?

Indeed, AI will be responsible in part for driving the ability of wealth management firms to provide more personalised services. AI will allow such firms to employ intelligent algorithms to analyse individual spending patterns, risk profiles, and investment preferences.

Sustainable Investing

People want to know not only how their money is invested, but the impact it is having. Nigel Green, CEO of deVere Group, has described the rise in ESG investments as a fundamental shift in investors’ mindsets, not just a ‘statistical blip,’ and this shift is likely to see the rise of sustainable investing as a key trend in 2024. Over 50% of investors have reported that they intend to increase their sustainable investments in 2024.

As the great wealth transfer from baby boomers to millennials continues, this will become especially relevant as millennial investors have shown a heightened sensitivity to social and environmental issues.

Integration of Cryptocurrency into the Mainstream

Cryptocurrency, once the maverick of the financial world, steps into the spotlight in 2024, shedding its outsider status for more mainstream acceptance. In January, we are likely to see a spot bitcoin ETF approved as the SEC meets to review several applications from investing powerhouses such as Blackrock. The odds of approval appear to be high, and more mainstream adoption is likely to boost investor demand and require traditional financial institutions to provide advice on this exciting but volatile asset class.?

Conclusion

2024 is set to be an exciting year for the WealthTech industry. The integration of advanced technologies, the rise of sustainable investing, and the growing acceptance of cryptocurrency are key trends shaping the future of wealth management. However, AI is undoubtedly going to be the dominant trend. As technology continues to improve and innovate, it provides an exciting landscape for the wealth industry to thrive in. Regulators will continue to struggle to keep up with such rapid changes, and questions will continue to be asked around the most ethical and socially responsible way to use such powerfult technology. However, this is a trend that cannot be slowed down and those who take advantage will reap the benefits.?

Key Takeaways?

• 2024 is set to be an exciting and fast paced year for the WealthTech industry.

• Artificial Intelligence (AI) emerges as a dominating force in the WealthTech landscape. In particular, AI will be used to create more sophisticated Robo-Advisor services, increase business efficiency for wealth management firms and create advanced algorithms to enhance customer experience and results.?

• Wealth management firms face increasing pressure to offer a more holistic and customised approach, emphasising hyper-personalisation to demonstrate their value. AI plays a crucial role by enabling intelligent algorithms to analyse individual spending patterns, risk profiles, and investment preferences, ensuring a bespoke financial experience for each investor.

• With a significant shift in investors' mindsets, sustainable investing takes center stage as a fundamental trend in 2024. Over 50% of investors express their intention to increase sustainable investments, aligning with the rise of Environmental, Social, and Governance (ESG) considerations. This trend becomes especially pertinent as the wealth transfer from baby boomers to millennials continues.

• Cryptocurrency sheds its outsider status, stepping into the mainstream spotlight in 2024. Anticipated approval of a spot bitcoin ETF by the SEC signals increased mainstream acceptance. This mainstream adoption is expected to boost investor demand and prompt traditional financial institutions to provide advice on this dynamic yet volatile asset class.