As long as there is wealth, there will be a need from the wealthy to plan it, protect it, grow it, and transition it. And historically, this has been a very high-touch undertaking.

Today, however, wealth management is one of the industries being rapidly transformed by technology, replacing what were once considered ‘core functions’, such as investment management and trust administration – with machines.

The implications are therefore clear – to be the WealthTech firm of tomorrow, organisations need to start creating the environment for future success today, setting in motion deliberate shifts in its workforce and employment lifecycle.

How the Wealth Management Workforce Will Change

Continued decline in the cost of computing power, coupled with emerging artificial intelligence (AI) capabilities, will move automation into a new era. Indeed, we are already seeing digital and mobile technology empower both advisors and clients when it comes to accessing their information, analysing accounts and executing transactions.

Trust administration and portfolio management are also ripening up for transformation, especially as AI becomes more widespread. Automation in investment management in the form of index investing, for example, has already effectively replaced at least 20% of the equities investment industry, and machine learning tools are likely to threaten what is left of active management.

Computers are already increasingly able to spot patterns from masses of data, learn without human intervention and make trade-off decisions enabling them to identify, test and refine active management strategies. In due course, they will be able to do this more objectively, more quickly and more thoroughly than human portfolio managers.

And while most wealth management firms focus on introducing automated investment offerings, the next impactful wave of innovation will advance the core discretionary portfolio management products. The objective will be to deliver active management at fee levels closer to index funds – ultimately a much more competitive value proposition than the current high fee / low alpha proposition provided by most active managers.

We are already seeing the shift to a WealthTech workforce with technology headcount and functional expenses growing at the expense of other functions. In this context, wealth managers of the future will become as much technology companies as financial companies, and as a consequence will also be competing with a broader set of firms for talent than they are currently used to doing.

Planning the Workforce of the Future

Wealth management firms need to begin creating the workforce of the future, and a critical task will be to determine how to blend the very different talent profiles, cultures and practices of technology and financial firms (Figure 1). This planning must include:

  • Mapping the value proposition, service, and supporting capability development path.
  • Anticipating the skills that need to be acquired and, equally importantly, the skills that need be exited – getting this timing right will be critical.
  • Creating an employee value proposition that is as attractive as Google or a tech start-up, while maintaining the core wealth management values that are critical to the unique fiduciary requirements in this sector.


Figure 1: Workforce Transformation Path



Source: McLagan Talent Solutions

As much as wealth management firms need to reinvent their value proposition and business model, they also need to transform their workforce strategies to support these changes. The pace at which the business can make these organisational shifts will be the bigger constraint on change than the sheer technical development time. Planning the workforce of the future must therefore begin now.

* This article has been adapted from an earlier piece written by Peter.

To find out more about how we can help you address how technology is affecting your workforce, please click here.

News from the world of wealth:

Thought of the week:

“We need to invest in a way that makes sure we’ve got the workforce we need in the future.” – Jeanne Shaheen

Peter Keuls McLagan and Scorpio Partnership

Author: Peter Keuls, Partner, Global Head of Wealth Management at McLagan and Scorpio Partnership.

Expertise: Peter advises leading wealth management firms on performance and pay optimisation through client experience improvements that enhance sales effectiveness and productivity improvement. He also consults on firm economics, cost reduction, branch distribution effectiveness and incentive plan design.

Background: Prior to joining McLagan, Peter was at Merrill Lynch where he was the Director of Marketing Strategy and Planning in the International Private Client group. Peter has a MBA from INSEAD in France and a Bachelor of Commerce from Queen’s University in Canada. And at the weekends: Peter enjoys hitting the ski slopes as often as possible. He is also an avid collector of modern art.

Photo from Fabrice Florin, used under creative commons license.

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