Is big tech making a move on wealth management?

For many in the industry, big tech firms pose a significant competitive threat to wealth managers. But should we instead focus on potential partnership opportunities?


Global tech giants like Google, Amazon, Facebook and Apple have long made inroads into the financial services industry. While they’ve so far focused mainly on payments, Amazon’s recent investment in Indian wealth management startup Smallcase is seen by many as the first step in a wider foray into the sector. 

Is this a wake-up call for wealth managers? Most in the US sector certainly think so. According to Global Data’s 2021 Global Wealth Managers Survey, 87% see big tech companies as a key threat. Meanwhile, Boston Consulting Group’s Wealth Report finds that some of the leading tech players are already building the digital infrastructure required by wealth managers. 

Three years ago Amazon collaborated with Fidelity Labs to create a digital financial advisor that people could interact with, potentially assessing their stock portfolios in virtual reality. The current robo-advice market could be a potential point of entry for big tech; it’s a small part of the broader wealth management market and is viewed as ripe for disruption. So how big a threat could a big tech incursion into wealth management pose?

Competitive advantage

Brands with broad consumer appeal are more likely to overcome the trust and inertia resistance often seen when it comes to investing, says Alan Higgins, chief investment officer at Coutts. That could give big tech an advantage in wealth management. 

“Big tech will benefit from targeted, clever advertising led by data insights as a way to gain and hold trust from consumers,” he says. “Trust is hugely important when it comes to money management so this will certainly act in big tech’s favour.”

People’s anxieties about making crucial money decisions and a misconception that wealth management firms only cater for the wealthy could also play into the hands of big tech, says Marcus de Maria, chief executive officer of Investment Mastery.

“When traditional wealth providers use words like diversification, asset allocation, risk tolerance etc, it puts people off,” he says. “If the big brands like Amazon or Facebook that people trust and use every day made it simple and also helped to educate people, they might be encouraged to take that first step. If big tech went a step further and allowed people to use their tools, talk to each other, and create a community, it could be a game changer.”

A matter of trust

But would seasoned investors trust big tech companies to manage their money? As a relatively new entrant to the sector, it would take time and a sizeable marketing spend to earn their buy-in. On the other hand, investors already embrace technology: for example, using secure client portals to check their latest portfolio valuations and to access and share important documents.

Giulia Lupato is head of regulatory policy and compliance at the Personal Investment Management & Financial Advice Association (PIMFA). She notes that big tech has already made huge progress in both the retail and financial services spaces. “If they were interested in doing the same in wealth management, why haven’t they done it already?”

A company like Amazon would struggle to make a dent in the type of relationships that many wealth managers have with their clients

Wealth management is very much a trust and relationship-driven industry. Big tech has had its issues with trust and isn’t tailored for establishing individual one-to-one human relationships. The UK wealth management sector is also a mature market, with very large, well-established players.

“A company like Amazon would struggle to make a dent in the type of relationships that many wealth managers have with their clients, particularly with those high- and ultra-high-net-worth individuals,” says Lupato.

However, she sees an opportunity for big tech through its data management and data processing capabilities, with the potential of becoming a data services supplier for the wealth management sector.

“We know that customers are looking for increased personalisation. They want a fee structure that is transparent, and the ability to use multiple providers,” she says. “They are looking for greater integrity around ESG [environmental, social and governance] investment. They’re also looking for intuitive digital experiences. This presents an opportunity for a data-driven business to provide that service to a large wealth management firm without having to become a wealth management firm themselves.” 

Digital investments

Tech-led wealth management could appeal to a wide range of asset holders, helping to bridge the advice gap while providing opportunities to democratise advice for broader sections of the population. “Communicating digitally and delivering advice virtually changes what’s possible and allows us to develop more cost-effective products tailored for new markets and fresh client demographics,” says Tim Thompson Rye, chief technology officer at financial advisory firm Progeny.

Big tech will always present opportunities and threats in equal measure. The traditional players in any industry need to focus on the state of play if they’re to remain relevant. Client expectations around things like communication, access to information and levels of control have changed and are now driven by big tech players. Wealth managers need to embrace innovative technologies across all touchpoints to remain relevant.

Hugo Bedford, chief executive officer of wealth management firm JM Finn, thinks a growing big tech interest in wealth management could be an opportunity for all. “They see the attractiveness of wealth management, thanks to the relatively low penetration of professional money management and the advice and pension gaps that exist today,” he says. “If the world’s largest businesses can encourage more younger people to start their investment journey, that has to be a good thing.”

Bedford also believes the involvement of the tech giants can help wealth management firms to clearly differentiate their offering. “While democratising wealth management has to be good for society, there will always be those investors whose needs are not met by the latest algorithm. There will always be clients who need a relationship with someone before they entrust their wealth to be managed by them.”