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In recent decades, India’s wealth management services have undergone and continue to undergo an incredible transformation.

Initially, wealth management services were provided by Chartered Accountants who also served as investment advisors for families and individuals. Since then, India, as a developing young economy, has seen an increase in the number of affluent people looking for investment opportunities as per capita income has risen. This, in turn, resulted in a technologically-driven evolution of wealth management in India. 

Today, the affluent middle class is rapidly expanding. With nearly 80% of households predicted to be middle-income by 2030, the country’s high net worth individual (HNI) population is expected to increase by 75% to 6.11 Lakhs in 2025. Ultra-high net worth individuals (UHNIs) are expected to increase by 63% during the same period.  

This burgeoning increase in disposable income indicates the wealth management sector’s potential for growth. According to Asian Private Banker, AUM across India’s private banking and wealth management players increased by more than 40% in 2021, adding $137 Bn in AUM, the fastest growth since 2017. 

With the increase in demand, there has also been advancement in the way wealth management firms provide services that go beyond wealth accumulation, while also focusing on providing goal-based solutions.  

To meet the increased demand for investment advice, technology has become an essential component of the industry.  Investment advice tailored to the needs of individual clients is no longer just an analogue process where dedicated wealth managers manually map portfolios of individuals and give personalised advice. 

Online Distribution And Trade Of Investment Products 

Technology was first introduced in wealth management in the form of automated transactions. While stock market transactions were already automated and orders could be placed online, buying and selling ETFs and mutual funds online rather than filling out forms greatly improved the timely and cost-effective distribution of investments.  

Further advances in tech also increased the number of retail investors who gained increased agency and autonomy. Those days are gone when using wealth management services was an expensive affair with only a few wealthy people having ready access to them. With the advancement of technology in this highly specialised industry, individuals now have much more affordable access to wealth management.

Tech-Enabled Back-End Infrastructure And Increased Operational Efficiency 

The incorporation of technology gradually optimised the back-end infrastructure for wealth management. The time it took to provide financial advice was significantly reduced. 

What a wealth advisor might do over a few days in terms of reviewing an investor’s portfolio, segmenting it, making recommendations, and so on, was reduced to minutes by technology. 

Digital Relationship-Enabled Wealth Models Provide Virtual Advisory With Real-Time Information 

With time, investors began to seek out faster and more convenient investment opportunities. This is where digital solutions such as robo-advisors and self-service investment portals became critical enablers.  

Robo-advisors, which first appeared in 2008, use market timing algorithms to make portfolio allocations. This technology provided insights and analysis to investors regardless of portfolio size or wealth. 

The Integration Of Artificial Intelligence (AI) & Machine Learning (ML)

With the rise of alternative asset classes such as unlisted companies, private equity investing, ESG, non-fungible tokens (NFTs) and carbon credits, the incorporation and advancement of AI and ML in wealth management have become critical. Leveraging AI in wealth management enables investors, regardless of wealth size, to use digital tools to understand their financial health holistically and plan their investments to align with their future goals. 

The advancement of advanced technology has further lowered the previously difficult-to-enter barrier of wealth management globally. More than ever, tools powered by AI and ML are being used to help tailor wealth management services for the general public. 

AI systems examine a customer’s financial history, habits, and current financial situation to determine the best course of action and provide effective financial advice to individuals with diverse portfolios and wealth.  Using technology in this regard allows wealth management firms to gain a deep understanding of their clients and their portfolio touch-points, allowing them to deliver the best investment intelligence in a cost-effective manner.  

The increased use of AI is also assisting wealth management firms in bolstering compliance and risk management functions. This allows them to automate data analysis, reduce administrative activities, and ensure their wealth managers are refocusing their time on higher value-add activities. 

The Road Ahead 

Long gone are the days when an investor meant a wealthy man in a suit. Thanks to investment technology, the digitally savvy and socially conscious millennials and Gen Z are now in the game. The younger generation of investors now has easier access to wealth management services to help them manage their portfolios and wealth. 

The introduction of advanced technological innovations in this space has eliminated a lot of investment jargon and technicalities with a simple and easy-to-use interface, lowering the barrier to accessing quality investment advice even further. Keeping this in mind, as well as the Indian subcontinent’s rapid digital penetration, AI and ML stand to revolutionise the wealth management industry in India at an unprecedented rate.