In our first episode of the podcast, find out a little more about our hosts Dani and Ned as they introduce themselves and discuss issues surrounding wealthtech with Paolo Sironi.
Everyone wants better finances, but we don’t wake up everyday thinking specifically about the steps we need to take to get there. This is where wealth managers and wealthtech comes in, providing advice and products to help us secure a better financial future. The problem here lies in that the product-pushing language used by managers or financial applications paints a cold narrative of the industry and does not resonate with people, nor does it appeal to them. The digitization of wealth management through wealthtech is supposed to alleviate this by allowing clients a simple, clean, and transparent financial life. But it is not there yet. Through our conversation with Paolo, we dive into why wealthtech is still largely lacking, demystify the notion of wealth management, and address how the industry can do better.
When making financial decisions, getting advice is an important part of the process. However, receiving advice through products results in a lack of meaningful conversation, and engaging in meaningful conversations with financial advisors is expensive. Wealthtech is intended to bridge this gap between clients and affordable financial advice through tools like robo advisors. Paolo shares with us that there is a misconception that robo advisors, a digital wealth management tool, are largely used by young people. Through a conversation he shared with John Stein, the founder of ‘Betterment’, he learned that a large portion of robo advisory users were between the ages of 45 to 50. The reason behind this statistic is that robo advisors were a huge hit for people who were already self-directed and had a plan for their finances. This brings into focus the importance of providing clients with knowledge and advice that will enable them to manage their finances and benefit from wealthtech directly.Providing clients with the tools to build awareness about risk and uncertainty is something that wealthtech and wealth managers need to improve on and address.
Ultimately, people are unique and should not be treated like assets. Financial portfolios should be personalised for every client and tailored to their respective goals in life. It is thus important to rework the negative narrative surrounding wealth management, curate meaningful conversations with clients, and provide tools for clients to become self-directed. Only then can wealthtech realise its potential and effectively create personalised portfolios for anyone hoping to achieve their financial goals.
