6 Predictions for Wealth Management in 2020

You know what they say about what opinions are like, right?

Take that sentiment and multiply it by ten for predictions.

And yet, here I am, writing a predictions post about where wealth management is going in 2020.

I couldn’t stop myself.

So let’s get right to why you’re here.

I’ve got 6 predictions for wealth management in 2020, and these are the trends and advancements I see as coming up big in the year ahead.

The Appification of Advisory Services

If you think about how our lives operate, services are thought of as apps now.

If you need a ride, you use an app. If you want food, you use an app for delivery. If you need groceries, you use an app to shop.

Even within a single company, different services are broken out into different apps.

A company like Esurance, which brings a digital approach to home and auto insurance, has different apps for its main insurance products, and then separate apps to monitor driving habits and to take photos of a home for coverage and claims.

Or you’ve got Facebook, which has the Facebook app, another app for messaging with Facebook Messenger, and then for the more visual-minded, they own Instagram so I’ll lump that in as well.

Now, it’s clear that advisory firms are not technology companies. As much as some people might shout at you “Think like a technology company!” there are a lot of differences between being a service business and a product business.

But I think you also see that the product businesses and technology companies often lead the way, and then other businesses follow the path that they’ve carved in the wilderness.

The line between service and product-oriented businesses gets blurred more and more as the digitalization of business takes over across industries.

Wealth management is on its way.

You already have advisors offering multiple ways to work with them—you can choose the traditional AUM arrangement, or you can go by retainer, or just pay a flat fee for a financial plan.

That fragmentation of service is going to continue, and it’s going to make the services offered by wealth management firms more like apps as time goes on.

Firms who offer subscription pricing are likely the ones who can make this switch most easily. Each service gets its own price, and investors can build their own bundle.

If an advisor already offers multiple ways to work with them, this approach simply standardizes the relationship into a form that consumers are already comfortable with for how they pay for services.

The Continued Digitalization of Communication

Sometimes I see an endless train of thought leadership about how advisors need to get more digital and I think: “The world is already digital, how much more digital can we get? Aren’t all advisors digital advisors in most respects?”

Then I actually see research on it and realize we have a looooong way to go.

Redtail surveyed more than 3,200 wealth management firms recently and found that the number of firms using digital methods to communicate with clients is...not great, Bob.

According to their research, only 13% of advisors use video calls and 10% communicate with clients by texting.

On top of that, while 87% of firms believe clients want to communicate through text, nearly 30% have a policy that prevents texting.

But wait. The stats get even grosser.

Only 7% of advisory firms use video to connect with people on a regular basis.

I have been vocal about the impact video can have on an advisory firm’s business for a couple years now, and I guess this all means I need to keep shouting.

There is tremendous opportunity for an advisory firm to set itself apart from competitors simply by leveraging modern technologies. This is not even a futuristic look. This is a “here and now” approach to client relationships.

If you’re in the 30% who isn’t allowed to text with clients, I’m truly sorry. But if you’re in the 70% who has the ability, then it’s time to get moving.

There are plenty of options available to advisors now to add this ability to their firm in a compliant way (obviously Redtail does it, that’s probably why they did the survey in the first place).

There is so much opportunity for growth here that I’ll have a hard time believing it if we end 2020 with stats that are still so dire. The growth may not be exponential, but I do believe that we’ll see growth here all the same.

Direct Indexing, Uh, Finds a Way

I’ve not been bullish on seemingly everyone else’s favorite new investment strategy: Direct indexing.

But now with trading costs at zero for online equity trades, I guess I’m hopping on the bandwagon.

More than trading fees though, is that fractional share trading is becoming more accessible. These are the two things that really needed to happen to make direct indexing viable for a mass market.

But even then, those two things aren’t enough on their own to bring direct indexing into the limelight because it’s still a strategy largely controlled by an advisor/wealth manager.

But if you put the power to choose direct indexing into the hands of normal investors, then a real shift can occur.

Wealthfront has offered direct indexing, but the entry point was a $500,000 portfolio . Not exactly what most people associate with a robo advisor, right?

Now, though, Motif is getting into the game by offering direct indexing to its robo clients for as little as $10,000. This is an indicator of a bigger shift coming.

I won’t be surprised to see all the major robo-advisors roll out accessible direct indexing as part of their offerings in 2020.

Once direct indexing hits the mass (and not just affluent) market, it becomes one of those expectation-shifting services that advisors have to pay attention to and explore how to incorporate into their services.

Fintech Goes Direct (to Investors)

This is a move I’ve been expecting for years that never quite happens—but I’m starting to see some reasons to give me hope.

Advisor technology has been advisor-focused (duh) but as I think about what innovation means for the wealthtech space and would really help advisors, to me it’s all about wealthtech companies making apps and software and solutions for end investors.

Advisors still get the benefit of seeing what investors do with it, but the software isn’t built for advisors as the primary users.

There are two examples I’m loving.

Project Avocado

eMoney’s new mobile app ( geared to retirement plan participants , and doesn’t require any advisor involvement) is showing the way forward for all the other wealthtech firms out there.

And the lesson is this: Don’t build technology that you have to give to an advisor that they then need to give to their client.

Instead, build technology for the consumer and then use that technology to introduce them to an advisor. Basically, you just flip it to reverse the user flow.

Investors are getting such quality financial app experiences from providers like Robinhood and Acorns that when it’s time to work with a human financial advisor, their mind is going to be blown by how bad the comparative portal experience is, instead of blown away by how great it is.

Advisors can’t really change that, either, which is the frustrating part. Their job is to be a financial guide, not a software developer.

And so wealthtech firms are going to have to take some brave steps to create truly client-centric software from the ground up that advisors can then latch onto on the back-end, instead of creating back-end advisor software first and repurposing it for an investor to use.

It’s a fundamental shift in how to think about and develop software, but there’s plenty of advisor tech for the back office. Do we really need more?

If an advisor’s business is all about the investor/client anyway, then this is the right way to approach the entire conversation about how to deliver technology.

Caveat: Yeah, this doesn’t exactly apply to all advisor technology. In my mind, I’m not seeing a super great use case for things like trading and rebalancing. I’m also certainly not advocating that every company builds a client portal. God knows we have enough of those already too. Feel free to prove me wrong, though, and create a portal to end all portals.


Behavioral finance is coming to take over the world, and Tulip (from Brinker Capital’s Behavioral Innovation Lab and Dr. Daniel Crosby) will lead the charge.

By my own definition, I’m cheating a little bit by including Tulip in this section. It is definitely an advisor tool, but the way in which it engages an advisor’s clients sounds unique and worth following.

The product video for Tulip describes it as an application that gives advisors insights into client behavior with a “gamified market simulation.”

Growing up, I was a huge gamer, but unfortunately I was born too early to become an e-sports superstar. And now, business and family has dramatically reduced my ability to spend time gaming. But still, I get excited when I see companies tapping into a gaming mindset to create an experience that’s fun and different.

Tulip bills itself as an “immersive game” that takes investors through thirty years of of investment-related situations to see how they might react to them. The catch is that it uses their actual assets to model those situations, so clients are supposed to feel like they’re living the events that unfold.

During the game, investors make decisions about their portfolio based on what they’re seeing as they attempt to stay on track with their goals.

From that data, it paints a portrait of their behavior traits and personality.

By doing this, Tulip gives advisors a snapshot of how to coach their clients through various situations. The data snapshot spits out a report of behavioral tendencies for the client when the game is completed, and then for ongoing relationship management, Tulip will notify an advisor when market conditions in real life are similar to the conditions that clients had trouble with in the game so they can proactively step in.

Like I said, unlike Project Avocado, this app is intricately tied to an advisor from the get go. But while advisors get the analytics from their clients who use the app, the difference is that the game itself is built to be used by a client (not repurposed backwards from an app that was first built for an advisor to use).

I’m really excited to see more financial apps built for an investor experience first, with advisors benefitting from the data they produce.

I think this trend will result in a more enjoyable and polished user experience and likely bring about some innovations in financial literacy that we haven't even thought of yet.

The Re-Bundling of Advisor Tech

For as long as I’ve been in financial services, the dream for advisor technology has been to pick what you want from a market saturated with choice, and then integrate those choices together into a single, seamless platform as they all talk to each other and freely share data.

Integration sounds awesome and when done well, it can be awesome. But far too often, integration is not awesome. In fact, most of the time, it doesn’t go beyond a Single Sign On. Click a button and you’re logged into a new web page or system without entering your credentials.

That kind of thing was fun back in 2009. It’s not super impressive in 2020.

The truth is that the promise of an integrated technology stack was always meant to recreate the experience of a single, unified platform. Except, for a variety of reasons (like differing API protocols, unwillingness to share data, and time limitations for programmers to dedicate to integrations), the dream hasn’t materialized.

I’m going old school with this reference, but remember “My Silver Bullet” back in the late 2000s and early 2010s? Like the silver bullets used to kill werewolves, a completely integrated and seamless tech stack is more fiction than reality.

And so, a lot of advisors are fed up with all the time, energy, and money (when they have to pay the money to prioritize development and get their vendors to integrate with each other) it takes to try to create an integrated tech stack from four or five or more vendors.

Instead, many advisors want to return to a time when they could choose one platform that did nearly everything they needed, and then bolt on a piece or two for the extras.

Envestnet has always been building that comprehensive platform, but you’re seeing it more from other vendors too. Orion Advisor Solutions made waves in 2019 with acquisitions of FTJ FundChoice for managed accounts (now called Orion Portfolio Solutions) and Advizr for financial planning . They still integrate with a huge number of companies, but advisors can increasingly use their platform for almost every part of the client relationship.

And then you’ve got Altruist, who is making a hell of a lot of promises about replacing all or most of an advisor’s tech stack with a single solution. We’ll soon have answers on how many of those promises they’ll keep when they come out of beta.

Advisors get talked at about “efficiency” from tech vendors a lot, and the tide is turning to where efficiency leans more heavily toward just choosing one solution and getting to work, than toward choosing your favorite of everything and then spending the additional resources to set up your workflow just how you like it.

And let’s be honest, have you seen the Kitces fintech map lately? Choice is good, but do firms need that many tech choices? A rebundling will force companies to really focus on if they’re creating a company or just a feature.

It very well may create some needed thinning of the technology herd.

Voice Search is Now

Smart speakers are so prevalent, even your mom probably got one for Christmas this last year.

There are now more than 120 million smart speakers in the United States, and that doesn’t even include everyone’s smartphones—almost all of which have a digital assistance built in.

Voice search isn’t just on the rise, it’s here.

So when it comes to content marketing, an awareness of how voice search impacts how people find what they’re looking for needs to inform how advisors approach their content creation.

Voice search isn’t a 1:1 match with text search.

With a text search, most people have become conditioned to search a few simple keywords strung together of what they want. For example, “financial planner San Diego.”

But when performing a voice search, people don’t talk like Kevin Malone from the Office.

Voice searches are usually longer, and often phrased as a question. For instance: “Where can I find a financial planner in San Diego?”

This change seems subtle, but it impacts how content is structured and created. Instead of focusing on a single keyword for blog content, advisors will need to put a greater focus on longtail keywords.

Additionally, creating content that addresses a specific question a prospect may ask could also gain an advantage.

And finally, keeping those Google Business listings up to date will be more important than ever.

Those are my predictions for how the industry will advance and change in the year ahead. I’m excited to see how right (and wrong) I’ll be over the next twelve months.

Ready to talk about it? Find me on Twitter here .

Related: The Biggest Stories in Wealth Management in 2019