Wealth Management

The Future of Fund Management: Fintech Revolutionising Advisory Services

Explore how fintech is reshaping wealth management through D2C platforms, driving tech innovations, and transforming advisory services. Stay ahead in the changing landscape. Read Markus Alin's take on it. Markus is the CEO and founder of Sharpfin.

We are now facing a shift in fintech and tech solutions for fund managers, and perhaps most significantly, the entire advisory process itself is moving towards D2C (direct-to-consumer), with fintech companies driving the development through smarter platforms.

We are taking action to reduce the impact of isolated, locked, long-term contracts, manual back-office administration, and the tedious implementations in wealth management. It is time to invest in the future platforms for asset management—platforms that future-proof tomorrow's distribution and investments.

According to the latest EFAMA research, advisory-based distribution channels, such as banks and financial advisors, account for 80% of fund assets owned by European retail investments, while direct sales constitute only 2%. National differences, however, are significant. In Sweden, pension savings account for 43% of fund distribution compared to the European average of 7%. In Norway, fund distribution is more evenly divided between channels, including fund platforms (24%) and direct sales (16%).

Advancements in financial technology are driving this shift. Regulatory changes have made it more difficult for smaller players to compete. Tech companies facilitate and help firms find new business opportunities and strengthen their market position through new technical innovations. 

According to the latest EFAMA research, fund managers believe that digital platforms will play a crucial role in reshaping distribution over the next five years. This development enables fund managers to take ownership of the entire investment chain and attract digitally savvy young investors.

This marks the beginning of a significant change in technology for advisors and the entire advisory process itself. A few years ago, this concept would have seemed both foreign and unrealistic to most advisory firms, now it seems to be an increasingly discussed trend.

We see a need to redefine what a platform is and how it can be better integrated into other systems to improve connections to the stock market and other financial tools. Companies are working hard to reduce costs and improve efficiency through automation and better digital integration, which is a marked difference from today's more isolated technology solutions. “D2C platforms for fund distribution” are a result of regulatory changes and higher demands from end-users, representing the first step in a series of transformative changes within the platform industry in asset management.

The only losers in this development will be the traditional players struggling to maintain their positions as narrow, standalone solutions, while companies embracing these new, integrated, and customer-centric business models will win.

Change may seem daunting, but if the alternative is to disappear from the market or for the competition to vanish, with smaller players being acquired, it is time to act to maintain a healthy market. Fintech companies can drive positive change, healthy competition and create more jobs, but politicians must take responsibility to ensure that both tech companies, fund companies, and wealthy individuals do not move their capital outside of Sweden.

Isn’t it time for Sweden's next tech boom? We cannot rely on Spotify and Klarna forever. A new generation is taking over. Let us enable them to build companies, employ talent,  invest, and place their capital here, in Sweden. This shift of assets under management from the older to the younger generation, known as the Great Wealth Transfer, is addressed by Sharpfin with modern software, highlighting user friendliness and sustainable finance. A next generations’ wealth management platform if you like.

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