A watershed year for wealthtech adoption

A confluence of environmental changes, like work from home orders, virtual events and an economic recession, have forced advisers to embrace tech tools in a matter of months

It’s impossible to ignore one of the greatest impacts of 2020 on wealth management is the increase in wealthtech adoption by advisers.

The pandemic has wreaked havoc on the global economy and the repercussions have caused more than two-thirds of Americans to report experiencing a financial setback as a result. Yet, this year has a silver lining: Advisers have finally placed technology — which has long been a topic saved as innovative strategies for the future — center stage.

A confluence of environmental changes, like work from home orders, virtual events and an economic recession, have forced advisers to embrace tech tools in a matter of months, and in surges never seen before.

The most-used tool for advisers is likely the videoconferencing provider Zoom, which topped more than 200 million daily users in March — up from an average of just 10 million per day last year.

Those bleak months of March and April had tools like eSignature increase 80% among Pershing advisers. Merrill Lynch advisers hosted approximately 98,000 videoconferencing meetings, a more than fivefold increase year over year, according to the bank’s second-quarter earnings.

Independent robo-advisers Wealthfront and Betterment both reported increases in account openings since the market sell-off began of 68% and 25%, respectively, according to Backend Benchmarking. TD Ameritrade, too, saw new-account openings for its automated investing platform jump 150% during the second quarter, from the same period a year ago.

As 2020 progressed and any hope of going back to normal faded away, technology was the catalyst that sparked a number of other tech trends as advisers started to settle into their new normal. Adviser appetite for digital marketing and client prospecting tools heightened as advisers can’t sit across the desk from clients. With technology, advisers plotted new growth strategies virtually from their living rooms.

Even industry events have been repurposed to digital settings. For example, InvestmentNews shifted its live conferences to a virtual platform, like the Fintech Virtual Summit, proving networking and learning can be just as valuable when it happens through a screen.

The mega trend that 2020 has brought to wealth management that will accelerate into the new year is the industry’s awakening to embrace financial planning as the new business model for growth — and technology will enable advisers to execute.

Industry players have taken to the trend as free financial planning apps entered the equation this year. Fidelity, Charles Schwab and Bank of America all launched free financial planning applications. The move not only provides free advice to new investors, but gives the companies the possibility of cross-selling products to their customers and increasing their wallet share.

Technology is also the catalyst to push investor appetite for more personalized client experiences to the forefront. Advisers now realize they can leverage technology to take advantage of model portfolios and continue to shift their value proposition from portfolio manager to financial wellness planner.

As the industry settles into the new year, advisers will increasingly turn to technology to automate tedious tasks and free up their time as they focus on clients’ holistic financial wellness.