Richard Turrin on the Present and Future of Wealth Management

Welcome to the first episode of our Wealth Talk series, where we talk to fintech and wealth management experts. This week, we are joined by Richard Turrin, who shares his experience and insights. As we explore the impact of digital currencies and the emerging role of AI in wealth management, we uncover how these innovations are reshaping the financial sector, creating new opportunities and challenges for investors, wealth managers and fintech startups alike.

TL;DR

• Cryptocurrencies and Central Bank Digital Currencies (CBDCs) reshape traditional financial systems and investment strategies.
• AI’s ability to think and reason is limited. On the other hand, the ability to repeat is very good and can solve basic things. The only thing AI can do is mirror the information online.
• Artificial intelligence is revolutionising portfolio management, improving client relationships and aiding decision-making in the financial sector. While Millennials prefer face-to-face interaction with their wealth managers, Gen Z is focused on the outcome of their portfolio.
• The problem is that the older generation does not want to use digital (credit cards, and certainly digital wallets on their phone). They prefer to use cash. This is the reality, and asset managers should make the digital transformation smooth to not leave anyone behind.
• Fintech startups should focus on innovative solutions while seeking opportunities to collaborate with established financial institutions to navigate the evolving financial landscape successfully. They need to make a difference in the sector.

Meet our guest

Richard Turrin - Author, Consultant, Speaker

He is the international bestselling author of Cashless China's Digital Currency Revolution and Innovation Lab Excellence. A top four global fintech influencer and award-winning executive, he previously led fintech teams at IBM after a 20-year career in investment banking and has spent the last decade living in Shanghai, where China first went cashless.

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Digital currency and wealth management

Richard’s latest best-seller book, Cashless: China's Digital Currency Revolution, was published in 2021. He combines his knowledge of digital currencies and country knowledge gained by living in Shanghai, China, for the last decade. It reveals how China's digital currency can help predict and better navigate a cashless future and digital payments.

CBDC is a digital form of a country's fiat currency issued and regulated by that country's central bank. It is the same as whatever currency you have in your hand. If you have paper pounds, US dollars or any other paper, it is the digital version.

The key advantage of CBDCs is their potential to enable low-cost, instant financial transactions. This aspect is particularly beneficial for wealth management, enabling seamless, digital financial interactions between clients and firms without the high costs typically associated with traditional banking or credit card transactions. The inevitable integration of these digital currencies into our lives, facilitated by online platforms and AI, marks a significant shift from traditional cash to digital currency forms in asset management.

Impact of AI in wealth management

Integrating artificial intelligence (AI) into wealth management is a transformative change, reshaping the industry. AI will refine wealth management strategies as an emerging force, but the transition is expected to be gradual rather than immediate. Current advances in AI, particularly generative AI, are making it increasingly sophisticated and offer promising prospects for asset managers and clients.

We are in a new era of AI, generative AI. It is very smart and that’s good. Nothing is wrong with that. And it is disruptive for our futures. It can do a lot of good for humanity. But the revoltion is not going to come as quickly as people think.

For asset managers, the potential of AI lies in its ability to improve understanding of client portfolios and facilitate informed decision-making. AI tools can help identify suitable stocks and investments and tailor strategies to meet individual client needs. On the client side, AI is revolutionising how individuals interact with their portfolios. Clients can now interact with their AI-powered portfolio managers to gain insights into performance, asset valuation and investment strategies. This interactive capability brings transparency and empowers clients to become more involved in financial decisions.

Moreover, the role of AI in wealth management signals a broader shift in the client-manager relationship. Younger generations, raised in a digital-first environment, prefer technology-driven solutions over traditional methods. This generational divide is notable, with younger clients valuing efficiency and direct results from their investment platforms, while older generations still lean towards personal interactions and traditional service models.

I was working in Singapore and one of my clients was an asset manager He said that their older clients like to for us to take them out to lunch. But the younger clients simply don't care about being taken out for lunch. They just want to see the portfolio value and see what's going on. The next younger generation wants to see the statement.

Therefore, the future of wealth management is one in which AI serves as a tool to enhance wealth management strategies and plays a critical role in catering to the evolving preferences of a diverse client base. This transition, while disruptive, is also an opportunity for the industry to embrace inclusivity and ensure that the benefits of the technology are accessible to all, regardless of age or digital literacy. As AI continues to evolve, its integration into wealth management will provide more personalised, efficient and insightful financial services, reshaping the industry's landscape.

Advice for fintech startups

Navigating the fintech landscape, especially for wealth management startups, requires a strategic approach that recognises the evolving nature of the financial sector. Having faced significant challenges in recent years, the fintech industry is at a crossroads where the dream of completely disrupting traditional finance is being reassessed. This realisation stems from the understanding that traditional financial institutions adapt and evolve, making room for fintech innovation and changing the competitive landscape.

As a startup, you need to do everything you can to stay alive and keep the money coming in.

For fintech startups looking to make their mark, they should focus on sustainable growth and practical collaboration. Financial stability is key, and one effective strategy is to partner with established financial institutions. These partnerships can provide a lifeline in revenue, allowing fintechs to continue to innovate and compete. However, the goal of overtaking large, established financial institutions is gradually replaced by a more nuanced ambition. Fintechs have the potential to drive change and innovation within the sector, pushing traditional institutions to improve their services and adopt new technologies, ultimately benefiting consumers.

The future of fintech is tied to innovation and the ability to improve and expand services within the existing financial ecosystem. The industry's success lies not in displacing traditional financial giants but in bringing fresh perspectives and technological advances that can coexist with and enhance traditional models. This approach allows fintechs to significantly contribute”1” to the financial sector, highlighting the importance of continuous innovation and adaptability in a rapidly evolving market.

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