In the fight between digital startups and traditional wealth management giants, the latter's advantages include not just their massive scale, but also their ruthlessness.
"If we are going to make this investment [in new technologies], there has to be an ROI," said Richard Steinmeier, head of UBS' Emerging Affluent and the Wealth Advice Center.
That diligence is critical because there is a tendency to develop technology for technology's sake, according to top wealth management executives speaking at SourceMedia's InVent conference in New York.
The focus needs to be on what advisers and clients really need, said Kelli Keough, global head of digital wealth management at JPMorgan Chase.
"We see increased fee and regulatory pressures. That squeezes our margins," she said. “So we need to be more efficient. Our advisers are dying under mountains of paperwork and inefficiencies."
Technology improvements can help firms lighten those burdens. And while cutting edge technologies may get the lion's share of the industry's attention, relatively simple innovations can improve efficiency as well as a firm's bottom line.
"I know we are supposed to talk about machine learning and AI, but guess what? When we have clients who aggregate away from us we are net new money negative. And when they aggregate with us we are net new money positive," Steinmeier said.
LEVERAGE
Certainly, UBS and other established wealth management players can deploy big dollars to tackle digital challenges. JPMorgan's technology budget tops $10 billion per year, according to Keough.
"I think that in businesses such as ours, a big advantage we have is leverage," Keough said.
Terri Kallsen will precede him next year as chair of the Board of Directors; Seay will take over that role in 2027.
The popular industry recruiting and retention barometer provided another window into the challenges facing LPL Financial with its latest major acquisition.
The Wall Street powerhouse has built its wealth division in large part through big deals but is not "looking to make acquisitions just for the sake of it, " said CEO Ted Pick.
She pointed to JPMorgan's digital innovations on the consumer banking side, such as the mobile experience for clients. "Our challenge is to bring that to the wealth management side," she said.
To adapt to the new digital environment, firms have been diverging in their strategies. Some are developing new technologies from robo advisers to predictive analytics in-house, while others are turning to partnerships with digital startups.
UBS has opted for the latter path, teaming up with Silicon Valley-based SigFig. Steinmeier said the wirehouse benefits from tapping an outside perspective.
"We found we needed to become more creative and make ourselves more uncomfortable, and to bring in people who think very differently than we do," he says.
Ultimately, there will be something of a convergence across the industry as digital startups are either bought up by traditional wealth management firms or form partnerships with them, and all firms make digital a core component of their business model. Similar patterns have unfolded in other industries, said Venu Krishnamurthy, head of Citigold and Citi Priority Client Segments, and Citi Personal Wealth Management.
"You don't go around telling people, I'm going to Cancun and I digitally bought my ticket," he said. "I think financial services and wealth management will just be digital."
