At least three trends are steering the wealth management industry. The first is related to the increasing role of mobile and digital solutions. “Clients of digital advisors report high levels of satisfaction— 5 to 10 times higher than clients of traditional wealth managers—due in large part to their improved experiences,” says a recent McKinsey report.
The second is the provision of holistic, goal-based, highly individual platforms. Clients are looking for financial solutions that are tailored-made to their needs. And they expect their investment profile to be extracted out of their financial goals and personal values rather than solely out of their risk/return portray.
The third is the placement of value on sustainable finance – the pursuit of financial returns using a set of environmental, social and corporate governance (ESG) criteria to choose securities for investment.
Three new companies are standing out at least in one of these areas: 3rd-eyes, Align 17 and Tribe Impact Capital.
3rd-eyes is a Zurich-based company formed in 2015 and led by former top executives of asset management company RobecoSAM. Its goal-based wealth planning system provides investment advice based on clients financial goals and personal values and beliefs.
Rodrigo Amandi, the company’s co-founder and COO, told me that: “The 3rd-eyes digital solution was created with the goal of revolutionizing the field of wealth planning and investment advisory by providing the right solutions to the wealth management industry: individual, holistic, expert and based on state of the art technology.”
The platform starts with the assessment of a client’s current financial situation, including all assets and liabilities. It then incorporates his/her short to long-term financial goals. For example – retiring with a monthly income of €20,000? Owning properties in three countries? Reaching a portfolio of $100 million in five years?
Building on this, the system calculates an individualized asset allocation that will allow the client to reach the defined financial goals under most economic scenarios. The platform also identifies investment products that best suit the client’s requirements based on his personal values and beliefs. How could my financial goals be achieved by investing in products and asset classes that do not pose risks to the environment? Or contribute to gender equality?
Align 17 was launched a couple of years later, in fact at the World Economic Forum at Davos in 2017. Created with UBS support, it is a digital marketplace that connects private wealth investors to impact investment opportunities. It uses the UN’s 17 Sustainable Development Goals (SDGs) as a framework to present tailored opportunities to investors. Its clients are mostly family offices and private investors who wish to expand their allocations into impact investing but lack expertise on sourcing the best deals globally.
Align17’s selected originators are required to pass a screening process with alternative asset manager Hamilton Lane before their opportunities become available for investment on the platform. To date, Align17 has secured input from impact fund managers such as NatureVest, Calvert, and SEAF.
“We developed a platform and a due diligence and transaction process that enables private investors to invest in deals that will make a difference in a way that is efficient, scalable, and manages investment risk,” says founder and CEO Georgie Benardete.
Tribe Impact Capital is the first wealth management firm in the UK dedicated to advising and managing private and institutional wealth for financial return in alignment with positive social, environmental and economic impact. Established in 2016, the company adopts the SDGs as its impact evaluation framework. It works across all asset classes.
To align their advisory with their own internal practice, they have embedded sustainability into their business – from the investment philosophy to the operations and supply chain.
“This has a number of advantages, not least is that we’re aligned with our clients,” James Lawson, one of Tribe’s founders, told me recently. “We believe perfection is the enemy of progress so we, like our clients, are on a journey. And we’re committed to the journey. From our profit lock to our B Corps membership, we’ve set up Tribe for people who get it, delivered by people who get it.”
3rd-eyes, Align 17 and Tribe Impact Capital are good barometers of the changes the wealth management industry is gradually embracing. That is: moving from an exclusive human advisor-driven offering to automated digital platforms, from profit-led deals to the maximization of wealth in alignment with environmental and social responsibility, and from standardized to highly customized financial advisory.
* Founder and President of the Granito Group, a company that advances the sustainable economy though management consulting, financial advisory, and policy & research. He was nominated Young Global Leader by the World Economic Forum (2017).