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Personal service: new wealth management platforms have replaced in-person advice with virtual meetings © Getty Images

Wealth management platforms have evolved significantly over the past decade as demand for more personalised services has resulted in the emergence of hybrid models, combining digital tools and online advice from a human manager.

For decades, wealth management consisted solely of face-to-face interactions with financial professionals, who designed and managed investment portfolios tailored to individual clients’ goals and risk tolerance. But advances in technology have led to the emergence of digital wealth platforms.

What are the main functions of wealth management platforms?

These platforms allow clients to perform banking transactions, manage their wealth and invest in a mix of assets, all through one portal.

Riaan de Bruyn, managing director of digital wealth at M&G Wealth, which launched an online digital investing service earlier this year, recalls that early digital platforms mainly involved clients selecting the investments they wanted, with an option to put them in a tax-efficient wrapper — in the case of the UK, an individual savings account (Isa) or self-invested personal pension (Sipp).

“Now, there is a lot more on offer to support the broad set of wealth and personal finance goals that people have: broader investment services, guidance and digital advice, and an increasing focus on education, financial wellbeing, coaching,” he explains.

Some of the latest digital wealth management services use advanced algorithms to offer clients fully managed portfolios — sometimes called “ready-made portfolios” — where asset allocation, investment selection, and rebalancing are all done for the customer.

“Online portfolios are designed to suit different risk and goal profiles, in order to cater for customers who neither have the time nor inclination to research and manage their own portfolio from scratch,” says Jason Hollands, managing director of Bestinvest, an online investment platform that is part of wealth manager Evelyn Partners.

How do wealth management platforms offer these services?

The first step in setting up a managed portfolio is to have a client select a risk profile, a goal — such as income or growth — and a preference for low-cost passive or higher-cost active management. Where available, a client may also specify whether they want sustainable or ethical filtering of potential investments.

These portfolios are not fully do-it-yourself, however. For example, with UBS My Way, clients can fully customise their portfolios based on their preferences and priorities, but then the monitoring of the portfolio is done by an investment manager.

“We combine a digital experience with the expertise of a personal adviser, developing digital tools that meet and exceed our clients’ expectations while still giving them access to an adviser,” says Josef Risi, head of product development for discretionary solutions in the Swiss bank’s wealth management division.

Digital wealth platforms also typically include a dashboard that gives customers a breakdown of their investments — by geography and asset class — as well as their value, what wrapper or product they are invested in, and what individual assets are in their portfolio.

“Naturally, clients will want to know how their investments are performing, and so they will be able to track the performance of their overall portfolio, the collection of their assets, and also of the individual investments that make up the portfolio,” says De Bruyn.

How much human involvement is there?

One distinctive feature of these digital wealth management services is that, although clients can click on the investments they want in their portfolios, the wealth manager actually does the investing. Once a customer is happy with the choices of asset and product, an adviser manages it for them while adhering to their risk profile.

“The emergence of risk-profiled, fully managed portfolios on the major DIY investment platforms means they now compete alongside the so-called robo-advisers that began to emerge a dozen years ago,” says Hollands. “These fintech [robo-adviser] businesses set out to help customers select a diversified, risk-rated portfolio — typically consisting of low-cost exchange traded funds and tracker funds — based on answering a series of questions.”

If clients need professional help choosing investments, then wealth managers can offer this. Bestinvest last year added the facility to book a virtual meeting with a coach — a qualified financial planner — for free to discuss their approach, ask questions and receive support and guidance to make decisions.

Advisers say that, as more companies develop hybrid models like this, they can address a gap in the market to better support those people who feel traditional wealth management is either too exclusive or costly for their circumstances but who lack the confidence to go it alone in managing their long-term investments.

What are the downsides of digital wealth management?

One of the main limitations is that online hybrid wealth services are not holistic in nature, unlike traditional advice services. The online advice or guidance is principally focused on helping the client select an investment strategy, within an appropriate account type, that fits a relevant risk profile.

However, this can still be a useful service for a large proportion of bank customers. “Online wealth management and more traditional services can coexist happily,” says Hollands. “Rather than being a threat to the latter, online wealth management services are key to democratising access to support and advice, and reaching a much broader cross-section of the population than is currently being served.”

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