- Jon Stein, the chief executive of robo-adviser Betterment, explained where he thinks the broader wealth management industry is headed in the next decade.
- Stein touched on how wealth-tech will evolve, and said that he thinks his firm’s segment of the wealth space — pure-play roboadvice — will consolidate over the next decade.
- “You won’t have to think about how much money you should keep in your checking or savings accounts,” by the year 2030, he said. “You shouldn’t have to think about which account to pay your bills out of.”
- Visit BI Prime for more wealth management stories, and you can read our full survey of other top wealth management executives here.
The rise of robo-advisers, the automated wealth management tools that take human touch out of the equation, has been one of the wealth industry’s defining features over the last decade.
In a recent survey, financial advisers called robos the most overhyped wealth-related tech. And traditional financial advisers say that there will always be a place for human advice, particularly when it comes to the complex needs of the ultra-wealthy.
But firms are pouring resources into making the basics of managing money more automated — Charles Schwab said this week it would roll out a new automated tax and retirement feature for both its basic robo-adviser and its hybrid robo product that offers human advice in the form of a certified financial planner.
Betterment, which was founded in 2008 and launched in 2010, has amassed more than $20 billion in client assets as one of the largest standalone robo-advisers in the industry. Wealthfront, a rival robo, launched in 2011 and this year reached some $21.5 billion in total client assets (it counts $13.6 billion in invested assets.)
Of course, those figures represent just a small sliver of global wealth management assets, and the big wirehouses that employ tens of thousands of financial advisers around the country measure their wealth assets in trillions, not billions.
Still, pure-play robos like Betterment and Wealthfront have created an expectation among younger users for low-cost wealth solutions that can be found right on their phone screens.
Investors including Bessemer Venture Partners and Menlo Ventures have backed Betterment, which offers its core digital advice product, along with a retirement plan administration platform for businesses and back-end tech tools for human financial advisers to use with their clients.
Jon Stein, Betterment’s chief executive, told us where he thinks the broader wealth management industry is headed. Stein touched on how wealth-tech will evolve, and said he thinks his firm’s segment of the wealth space — pure-play roboadvice — will consolidate over the next decade.
Here’s the text of our full Q&A with Stein. You can read our full survey of other top wealth management execs here.
What kind of wealth-tech will be ubiquitous in 2030 — and what may be phased out?
By 2030, consumers will be using a platform that not only intelligently manages their investments, but also incorporates their ongoing cash management into their advice and automation.
You won’t have to think about how much money you should keep in your checking or savings accounts. You shouldn’t have to think about which account to pay your bills out of.
We’ll automate your entire financial life so you can spend more of your time doing the things that actually make you happy. As a result, we would expect to see things like budgeting tools and programs phased out.
Analysts expect a wave of adviser retirements between now and 2030, and a portion of wealth managers think their jobs will no longer exist in five to ten years. As the industry evolves, how will the job description for the wealth manager/financial adviser of 2030 have changed from the manager/adviser of 2019?
We are already seeing a shift. Historically, having an adviser or wealth manager most often meant portfolio manager. Technology has significantly reduced the lift required to properly manage a sophisticated portfolio.
Advisers are increasingly prioritizing financial planning and coaching to provide their clients with value.
How will robo-advisers and the broader theme of self-directed investments impact the financial markets in 2030?
It has never been easier or cheaper to invest in a high-quality, diversified portfolio paired with fiduciary advice.
We should anticipate that by 2030 we will see millions of Americans’ outcomes improve by a reduction in their investing fees, greater access to quality funds and the elimination of the minimum to start investing.
Will the wealth management industry consolidate in your firm’s segment over the next decade?
Are fees for managing wealth going to fall by 2030?