Traditionally, wealth management has been reserved for high-net-worth individuals, often due to the high entry barriers and limited awareness of the service. But the COVID-19 pandemic has dramatically shifted this landscape, making wealth management more accessible to the masses.

The economic effects of the pandemic have left many people with less disposable income, and as a result, more individuals are seeking ways to effectively manage their finances. With more time spent at home, awareness about wealth management is rising. Unlike traditional wealth management, which typically involves interacting with brokers, bankers, and consultants, WealthTech and digital platforms are revolutionizing how people approach managing their finances.

Today, an increasing number of people are turning to online wealth management platforms, enjoying the advantages of real-time access, enhanced security, and a broader range of investment options. The surge in interest is also helping to fuel investment in alternative asset classes like cryptocurrency. The popularity of these platforms has made wealth management a more inclusive space for everyone.

What Is WealthTech?

WealthTech refers to a subset of the fintech industry focused on developing platforms and technologies that help users manage, analyze, and grow their wealth. These platforms include everything from online trading services and investment dashboards to cryptocurrency marketplaces and robo-advisors. WealthTech simplifies wealth management by offering a wide range of services, making it easier for users to manage their investments.

While traditional wealth management focused on a few key services, WealthTech now offers a variety of options, including:

• Online Marketplaces: These platforms act as a one-stop shop for various investment vehicles and asset classes, pulling data from multiple verified sources.
• Portfolio Management Tools: Comprehensive tools that allow users to manage and track their investments in one place, with features ranging from instant trading to expert analysis.
• Robo-Advisors: AI-powered advisors that use machine learning to automate investment strategies based on market conditions.
• Algorithmic Trading: Advanced algorithms that allow for real-time, automated trading to meet the demands of fast-paced markets.

These platforms connect directly with banks and payment services, allowing users to buy, sell, and cash out their investments in real-time without relying on a broker.

How Popular Is WealthTech?

WealthTech has seen rapid growth since its inception, with investment in the sector reaching a record $20 billion in 2021. According to Statista, investments in WealthTech grew significantly, from $2.2 billion in 2017 to over $5.5 billion in Q1 of 2021. This growth demonstrates the increasing demand for digital solutions in the wealth management space.

Why is WealthTech in High Demand?

The surge in popularity of WealthTech is driven by the increasing pace of our digital world. Investments can now be made across time zones, with people trading and managing portfolios from anywhere. Traditional platforms often require professional assistance, which can be costly and inconvenient for the average consumer. WealthTech addresses these pain points by providing accessible, real-time solutions with user-friendly interfaces and instant access to tools and resources.

In today’s fast-moving world, WealthTech platforms offer a way to make investment decisions swiftly and confidently, regardless of location or financial expertise. This convenience, combined with the flexibility of real-time data, has contributed to the sector’s rapid growth, making it one of the fastest-growing tech sectors globally.

The Success of Robinhood: A Case Study

To understand the impact of WealthTech, consider the rise of Robinhood. Launched in 2013, Robinhood grew exponentially, reaching 13 million active users by 2020. It transformed from a small player into a major disruptor by offering features that catered to customers’ needs. Robinhood’s success can be attributed to five main factors: reducing the cost of entry for retail investors, adopting a digital-first investment model, providing a wide variety of investment options, educating consumers, and boosting financial literacy.

Today, Robinhood hosts millions of first-time investors, showing how WealthTech has democratized investing and made it accessible to a broader audience.

Tailored Solutions for Different Investors

As WealthTech continues to evolve, it’s becoming clear that different types of investors require different tools. New investors may need easy access to smaller trades and practice accounts, while experienced investors or those in specialized regions may require more advanced solutions tailored to specific needs, such as compliance with local regulations.

To address these needs, companies are incorporating advanced technologies like AI, blockchain, and machine learning. These innovations are not only improving the security and efficiency of WealthTech platforms but also making them more personalized and adaptable to the needs of diverse users.

The Future of WealthTech

WealthTech and related technologies are transforming traditional wealth management practices. As more people turn to these digital solutions, the way we invest and manage our finances is changing. With the rapid advancements in technology, it’s only a matter of time before WealthTech becomes the standard way for everyone to manage and grow their wealth.