We are entering the ‘Wealth as a Service’ era

Wealth as a Service (WaaS) offers an integrated, cost-effective, scalable solution for financial institutions to deliver wealth management in a more “turnkey” way.

In brief

• Wealth management firms operate in a competitive landscape, needing to adapt to evolving advisor and client needs, technology trends and regulatory requirements.
• Firms are investing too much time and resources in outdated systems and processes, diverting focus from the advisor-client experience, in which WaaS creates new opportunities for transformative growth. 
• As firms navigate the complexities of the current landscape, WaaS offers a compelling solution that enables firms to focus on strengthening customer relationships and their core business offerings. 

Today’s consumers increasingly expect high-quality financial advice and superior service from their wealth managers. These professionals must now go beyond asset protection and returns, guiding clients towards holistic financial well-being that encompasses health, wealth and retirement planning. Yet, many wealth managers are ill-equipped for this shift, lacking the necessary technology, talent strategies and profit margins to take on the business risks.

Enter Wealth as a Service (WaaS), a paradigm with service providers offering solutions that cover all, or nearly all, of the capabilities required to support a company’s wealth management business. WaaS offers a seamless, cost-effective solution for financial institutions to extend wealth management services at scale. By outsourcing undifferentiated functions, these institutions can efficiently scale their wealth management offerings.

2. Wealth managers are interested in partnering with a comprehensive WaaS provider. Eighty-eight percent of financial institutions surveyed indicated using more than five providers to deliver wealth management services today, resulting in increased complexity and obstacles in integrating systems and technologies across multiple vendors.

3. Service providers consider their offerings to be holistic or aspire to expand their capabilities. Many providers have focused on partnerships with best-in-breed platforms and FinTech firms to offer a holistic and integrated solution for financial institutions.

4. Wealth managers do have some reservations in making the leap to a single provider. Roughly half of financial institutions surveyed (54%) highlighted change management and implementation costs as primary risks. Sixty-five percent of firms also indicated that they expect providers to offer implementation and conversion support.

5. Some gaps still exist, although custody-led and white-labeled packaged service providers are close to closing them.

Conclusion

WaaS is revolutionizing the financial services industry by offering a holistic and integrated experience that streamlines the complexities of offering wealth management solutions. Despite the challenges of regulatory pressures and technological fragmentation, strategic outsourcing to WaaS providers is better enabling firms to focus on their core offering while providing a competitive wealth management experience.

In this evolving landscape, EY teams stand ready to assist firms in assessing their wealth management strategies, acting as an ecosystem connector to wealth management institutions and providers. We have invested in building artificial intelligence (AI) enabled technology assets such as EY Nexus to enhance firms’ ability to integrate with WaaS providers smoothly. Our goal is to support wealth management organizations in not only keeping pace with industry changes but also to lead in innovation and client service.

This article is also contributed by Joe Correnti - Managing Director, Alex Finley - Senior Manager, Cullen Clark - Senior Manager and Allyson Harris - Senior Manager.