4 ways the coronavirus is changing wealthtech

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Waves of tech-enabled disruption over the last decade still couldn’t have prepared financial planning for the level of change that’s been compressed into the last few months. The impact of the coronavirus has been so swift and broad across the global economy, it’s hard to say what lasting changes will come to planning and financial services overall. But there are some early trends that advisors and wealth management firms should pay attention to.


The pandemic has forced everyone online. The ubiquity of videoconferencing has demonstrated to Americans that much of their work can be done anywhere digitally; according to polling firm Gallup, 59% of employed Americans would want to continue working remotely if it were left up to them. The realization that much of business can be done remotely will apply to the practice of wealth management.

The in-person versus digital-only debate is now a moot point. Necessity has also negated the premise that only one demographic can use digital. Firms set up for digital investing have reported brisk uptakes in their offerings — UBS, for instance, reported that client log-ins for its Americas wealth management business soared 26% in March compared to December, according to the firm’s first-quarter earnings report.

More Americans working remotely during the coronavirus pandemic COVID-19

The idea that independent robo advisors will falter in a crisis has found little traction, too, as Wealthfront and Betterment, the leading digital advice firms, reported double-digit percent increases in account sign-ups despite stock market turmoil.

Any firm without a digital advice offering is missing out. As budgets continue to get punished, expect every firm to be investing in digital platforms and chasing the online-only client, and maybe start making choices to cut back spending on maintaining a large physical presence.


The emerging investor generation has now lived through three market upheavals: 9/11, the 2008 economic crisis, and the current pandemic. It’s safe to say that this investor will have little tolerance for surprises like hidden fees and even less for unnecessary expenses.

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Successful advisory firms will heed the psychic toll the crisis has wrought on clients, and truly embrace the call for transparency in fees and investments that has swelled over the past few years. Advisory firms that find favor won’t play cute with legal explanations about fees, fine print, or offer up lengthy, scholarly treatises on their investing that make investor eyes glaze over; they will make it plain and simple enough that client fees and costs can be deduced in a glance.

Product risks will be clearly labeled and understandable. Investment strategy explanations will be concise and written for clients, not experts, and easily available for one-click review, rather than placed off within the entrails of a website.

The crisis is showing that the young investor is looking for opportunities and willing to invest. Successful firms will eschew traditional bad practices and meet these clients online in good faith.


Though robo advisors and online brokerages are experiencing record increases in activity, it also means current hybrid digital advice models are being tested to capacity.

Before the pandemic, the industry was ramping up its efforts to add more advisors dedicated to working with digital-only clients. JPMorgan in February announced it would be growing its advisor force to support new digital offerings like the You Invest platform.

“As much as we think everyone wants to do it all from their home on their iPhone, it eventually becomes complicated enough that you want to talk to someone,” said Asset & Wealth Management CEO Mary Callahan Erdoes at the time.

But most of these plans were being done under the premise of gradual growth in digital advice, not the volume of activity advisory firms are witnessing now. That means service blockages across virtually every hybrid digital advice platform as clients wait to speak with a human advisor. There’s also the real likelihood of a system glitch taking down a digital platform at the worst time possible; Robinhood has been the recipient of multiple class-action lawsuits after outages in March caused its trading customers to miss the biggest one-day point gain in the stock market’s history.

Advisors with clients who have digital investments may begin to apprise them that these technical and capacity issues are in fact modern investment risks. Regulators may also be moved to examine the issues surrounding these factors as well.


The pandemic has thrown cold water on what was a hot fintech investment scene.

Global fintech funding has dropped from $11 billion in the fourth quarter of 2019 to $6 billion in the first quarter of 2020, according to CBInsights, a low point not reached since 2017. Already, the pandemic seems to have claimed one wealthtech innovation pioneer, Motif Investing, which abruptly announced in April it was shuttering. CEO Hardeep Walia was prescient enough to pivot his brokerage app to subscription pricing three years before industry giants such as Schwab embraced the subscription model.

That sort of fresh thinking kept the industry on its toes, says Doug Fritz, head of industry consultancy F2 Strategy.

“He was smart and had great folks on his board. And if he wasn’t successful? I don’t think we can chalk it up to a bad business model – I think it’s a harbinger of what’s to come.”

The industry has relied too much on startups to be nimble and create innovation, Fritz suggests, and incumbents will find themselves vulnerable if fintechs they’ve leaned on to get them digital find themselves out of capital. Industry innovation will slow down as venture capital firms close down weak startups, Fritz says.

So in finding a path out of the crisis and serving more customers better, the industry may move toward joint innovation efforts to sustain and protect a flow of the best ideas and new technology.

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