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Industry Spotlight > Advisors

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.

Just as Coca-Cola bottlers and Budweiser distributors have shown, distribution has become more powerful than manufacturing, and this battle is now playing out in real time in the IBD space. As a result, enterprise-level asset managers and technology providers are now targeting individual OSJs for their future growth, rather than attempting to work with the home office, which further increases the negotiating powers of large OSJs.

4. Marketing automation remains reliant on advisors’ personal selling skills.

Despite the rampant usage of marketing automation tools to drive organic growth in the advisory world, results have been lukewarm at best. Just about every benchmarking study has shown that the independent advisor industry’s organic growth rates once market gains are subtracted out have been hovering around zero, which is a cause for alarm as clients age and increase their distributions despite persisting market volatility.

Marketing automation platforms are terrific at providing scale and reach for advisors. However, the ultimate link in this chain is the last mile of the prospect journey being matched and engaging one-on-one with their potential future advisor. Even the best, most powerful lead generation systems can’t replace that human-to-human interaction at the final point of sale. 

Thus, advisor education programs for improving advisors’ personal marketing approaches and selling skills while building robust profiles online and leveraging video to show up as authentic will be in high demand to supplement advisor marketing automation technologies.

For anyone looking to provide value-add to their network of advisors, providing this type of advisor education will be invaluable to building mind-share and attracting the best and brightest advisors.

5. The puzzle of technology integration finally gets solved.

Technology innovation never stops, and the latest iteration in wealth management is all about new cloud-native data management and sharing technologies that will provide significant benefits. By leveraging massive data management cloud platforms such as AWS, Microsoft Azure, Google Cloud and more, advisors can build their own technology infrastructures that finally will provide that all-in-one, unified experience.

By creating an “integrated digital ecosystem” in which advisors can expose, just like Apple does with their App Store, the ability for vendors to publish their applications or pieces of their applications into your environment, advisory firms now have a much better approach to personalize the experience for both advisors and clients. 

These digital ecosystems are completely integrated and provide the flexibility to accomplish what advisors want in an elegant user interface that is intuitive and works, no matter what operational role you play or how you want your client experience to be. That is the promise for what an integrated digital ecosystem provided as a service can do and is now emerging as the best answer to technology integration.

These are just a handful of the most promising developments that I believe will forever alter the direction of the industry. They represent what the top minds in the industry are working on right now to remove the frictions that are slowing down the full-scale adoption of fiduciary advice.


Timothy D. Welsh, CFP, is president, CEO and founder of Nexus Strategy LLC, a leading consulting firm for the wealth management industry. He can be reached at [email protected] or on Twitter @NexusStrategy. 

(Image: Adobe Stock)