The future of private wealth management is goal-based financial planning. This offers a more tailored financial advice, where the specific goals of the clients and not the products are at the centre. This offers plenty of opportunities for robo advice. Retail clients traditionally offer too little volume to warrant a customized financial advice, and as a result have been serviced with standard products. But it is precisely these clients who have very specific goals and ambitions for their financial future, so online, partly automated goal-based financial planning makes great sense to them.

 

According to Ton Kentgens, Head of Global Business Development for Ortec Finance Private Client Solutions, goal-based financial planning is the way of the future. Besides the obvious benefits to the clients themselves, it is something banks, asset managers and robo advisors can no longer avoid as it is part of the regulatory demands of MiFID II. This idea has not landed properly in Germany yet though. Financial advisors are often still too focused on selling products, not on helping clients reach their financial goals, Kentgens argues. German robo advisors seldom ask for the concrete goals of the client or whether a selected investment product is actually suitable for said goals. There are great challenges ahead for robo advice, but they offer great opportunities as well.

To read the article (in German), click here