5 Trends Shaping Wealth Management in 2023 and Beyond

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What You Need to Know

  • Subtle yet dramatic changes are happening in the independent wealth space that will shape the industry going forward.
  • Expect to see an increasing number of technology weapons originating from asset managers as they look to better control and cement their leadership.
  • Artificial intelligence, marketing automation and technology integration will also be significant drivers.

Each year, industry players sit down and read the tea leaves to spot the subtle yet dramatic changes happening in the independent wealth space and to identify the key underlying themes that will shape the industry going forward.

Consider these under-the-radar developments that will likely have a big impact on your strategic planning for the coming year and afterward.

1. Asset managers fire back with their own technology platforms.

For the past several decades, we’ve seen the unrelenting march of technology innovation taking basis points out of the investment management value chain, most notably in the lucrative areas of distribution. As a result, asset managers have been relegated to the back seat in the financial advisor ecosystem, as their technology overlords dictate the terms of industry change. 

To stem this tide, expect to see an increasing number of technology weapons originating from asset managers as they look to better control and cement their leadership back into the minds of advisors by deploying elegant, goals-based financial planning, asset allocation and portfolio construction tools of their own. 

2. Artificial intelligence finally arrives in wealth management.

Following the launch of ChatGPT on Nov. 30, more than 1 million users signed up just in the first week to take this remarkable piece of technology for a test drive.

According to Forbes, ChatGPT is an open-source, end-to-end dialogue system designed to enable anyone to quickly build and deploy conversational AI agents for chatbots, virtual assistants, and other interactive applications. 

It is so named because it is powered by the GPT-3 language model, which is a compelling natural language processing (NLP) approach that can generate human-like text from a few words of input. 

Early results of ChatGPT apps are turning heads, and it’s only a matter of time before technology innovators unleash ChatGPT into financial planning and investment management processes to drive scale and engagement and fundamentally transform how financial services will be developed and delivered. 

3. OSJs become even more powerful.

For years, the largest independent broker-dealers have depended on offices of supervisory jurisdiction (OSJs) to provide compliance, technology, marketing and practice management support to their advisors at the local level. By delegating this service and support, the home offices of the large independent broker-dealers are able to leverage themselves, control costs and better achieve scale. 

However, by doing so, they have now given the power of distribution to a handful of massive and growing localized networks, some with upwards of 1,000 advisors. Thus, some IBDs are rapidly losing control, as these big OSJs start dictating terms back to the mothership. 

Because they control a huge chunk of assets-under-management revenues and advisors on the big IBDs’ platforms, these OSJs have leverage. They can threaten to break away and go completely independent as an RIA unless concessions are made and costs are lowered, creating a vicious, painful cycle for IBDs. In fact, we have recently seen several of those large, industry-defining breakaways occur as relations deteriorated and staggering amounts of AUM and advisors were lost.