Wealth Management: Democratisation Unlocked

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17th June, 2024 No Comments

Written by Christine Edwards, Chief of Staff at Sidekick

Wealth management has traditionally been considered an industry locked away from the vast majority and only accessible to the ultra-wealthy, i.e. those considered to have more complex and pressing financial needs.

The term ‘wealth’ has been shown to create cognitive barriers, for those who do not feel they have an abundance of ‘it’ may feel it does not apply to them.

But wealth applies to us all, and managing our overall wealth, personal finances, needs, and objectives is simply a fact of life. Whether we have our retirement plans fully mapped out or are just starting out, failing to plan is a plan for failure. For certain, there are a wide range of options and associated complexities involved, but access to the products, tools, and resources to help manage the wealth we each have should and can be made available.

The truth of the matter is that it’s precisely these tools and resources that have created advantages for the super-wealthy and helped them to continue growing their wealth. The knowledge, support, and funds to pay for it have long meant that if they choose to use them, this segment can navigate their finances in a manner that those without these resources simply could not—game, set, match.

An era of change is, however, well on the horizon.

Working in wealth management for the past seven years, split between supporting “the wealthy” and the wealth management firms they use, I’ve personally witnessed great change and advancement. With the advancements of technology and the ever-increasing rise of Fintech firms, the industry is becoming increasingly accessible, both out of consumer need and operational necessity. 

The COVID-19 pandemic forced many traditional firms to rethink how they operated, how they served and managed relationships with their customers, and how they made their products and services more readily available and on demand. This gave customers more visibility and control in a relationship that has typically been very advisor-led.

Another cause spurring change is the inflight intergenerational wealth transfer. Simply put – the ongoing transfer of £5.5tn from baby boomers to younger generations is expected to conclude in 2050. This movement of money to a new segment, one with varying needs and vastly different expectations, even from an experiential perspective, will call for an overhaul in how wealth is managed. 

We’re also aware that it’s estimated that by 2025 60% of UK wealth will be in women’s hands. Yet industry incumbents have typically been geared more towards male investors. This segment, who have typically in marital homes, managed investments while female partners managed household expenses.

These shifts and cultural changes will continue to force a change in how we approach wealth management, and with more Fintech companies starting to push, and rightly so, for access-for-all, these changes seem timely.

The Democratisation Trend

Historically, wealth management services required high minimum investments; if you were to go to a private bank, you wouldn’t be surprised upon learning that the required minimum investable assets is north of £500,000, effectively excluding those with smaller budgets. However, new Fintech entrants like Sidekick are disrupting this paradigm, with the goal to make private banking less private. 

We’ve been able to launch products and services typically not available to retail customers, such as active investment management and our portfolio line of credit. We are committed to lowering the barriers to entry when it comes to wealth management and enabling a wider demographic of consumers to access more sophisticated ways of managing their money, unlocking the advantages of those who have more of ‘it’’.

According to Capgemini, technological advances are expanding the audience for wealth management services and introducing more inclusive use cases. With the increase in digital wealth platforms, wealth management is becoming a reality not for the few but for the many.

Quality and Personal Outcomes Over Pure Investment Growth

However, with this increasing optionality of services, it’s becoming increasingly necessary to understand the value these platforms are offering when it comes to meeting your individual objectives. Democratisation is key and underway, but the value is critical.  

Consumers are increasingly looking for comprehensive solutions that align with their broader life goals rather than merely seeking high returns on investment. A concern I hear a lot is, “I have money… I know what I want my future to look like… but I don’t know where to start.”

Proper wealth management and wealth building isn’t about getting on a platform that allows you to buy the hottest and trendiest stock, à la GameStop and Nvidia. It’s about looking at your short- and long-term objectives and aligning your finances to help you achieve those goals. So, while there is democratisation of access to investment and wealth tools, we have to remember how these tools or services will help us achieve our goals so that we can genuinely and meaningfully build wealth.

All of us. Together.

*It’s important to note that the content of this article does not represent investment advice – investors should not take decisions to trade based on this information. If you do invest, your capital is at risk.

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