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01. Why Does Wealthtech Suck?! with Paolo Sironi

01. Why Does Wealthtech Suck?! with Paolo Sironi

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Key takeaways

  • The narrative surrounding wealthtech is negative and needs to be reworked
  • Wealth managers need to provide information that will enable their clients to be self-directed eventually 
  • Technology bridges the gap between clients and affordable financial advice

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.

Meet Our Guest Speaker

Paolo Sironi

Global Research Leader (IBM), Co-host Fintech Podcast (podcast) at IBM, Breaking Banks Europe

Paolo is one of the most respected voices in the FinTech industry globally, providing business expertise and strategic thinking to a network of executives among financial institutions, startups and regulators. He is Global Research Leader in Banking and Financial Markets at IBM Institute for Business Value. Celebrated author on quantitative finance, digital transformation and economics theory, he explores the biological underpinnings of financial markets and how to bolster with technology and business innovation the global economy’s immune system in today’s volatile times.

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