The network effect in wealth management
Financial Planning
The leading resource of news, data and analysis for the wealth management industry.
What’s known as the network effect refers to a business principle in which the more often people use a particular good or service, the more valuable that good or service becomes. Take Amazon. The more retailers put their products on the global digital platform, the more consumers everywhere look to it as a place to shop.
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A network effect relies on commonly-shared structures and systems. And that’s lacking in the wealth management industry, where scores of different software solutions and technologies exist, according to Jason Wenk, the CEO and founder of Altruist, a custodian, brokerage and software firm.
Said Wenk at FP’s annual INVEST conference: "We don't have a common operating system, so we're not getting any network effect. Instead, we've got 50 solutions that all want to be the center of the universe."?
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