Close panel

Close panel

Close panel

Close panel

Fintech 10 Oct 2017

What is wealthtech?

The words “wealth” and “tech” have come together to give rise to a new generation of financial technology companies that create digital solutions to transform the investment and asset management industry.

The task of personal wealth management and growth is now also in the hands of technology. In recent years, new companies have arrived on the scene offering advice based on artificial intelligence and big data, micro-investment platforms, or trading solutions based on social networks.

This sub-category of fintech companies dubbed “wealthtech” reached a record 74 financing agreements worth $657 million in 2016 and has been growing consistently for the past five years, according to data from CB Insights consulting firm. So far this year, approximately 40 different investments have been made in the sector, with a value of around $315 million. CB Insights identified 90 firms in the 2016 tech scene that fit the definition of this new trend: companies that offer alternatives to traditional investment and develop technological tools to support investors and advisers.

The greatest concentration of these companies is in the United States, where the robo-advisor market alone (which receives 30% of all wealthtech financing) will manage a trillion dollars by 2020 and $4.6 trillion by 2022 according to estimates by BI Intelligence. The United States was the fastest in adopting this type of products, far ahead of Europe, and also has the largest volume of assets under management (AUM) in the world, according to a report by FT Partners.

Although robo-advisors are the best-known product in this field, there are many new ideas to improve the investment industry through technology. Following are some of the categories identified by CB Insights to classify the sector, each with a wide range of business models, tools and services.


Robo-advisors are automated services that use machine-learning algorithms to offer users advice based on the most profitable investment options in the market, yield targets, the user’s risk aversion profile and other variables such as age and income. Without a doubt, they can serve as replacements or complements to the traditional figure of the financial advisor customers trust to manage their investment portfolios.

By replacing expertise and human experience with artificial intelligence, these systems significantly reduce costs. This has allowed people who cannot afford a financial advisor or those with fewer resources to invest to be able to access these services. Two of the most popular are the U.S. companies Wealthfront and Betterment.  The latter, the largest in the market and currently worth $800 million, offers an intelligent platform for personalized advice at a low cost.

Again, these products are the most popular in the U.S. is the market. According to BI Intelligence, there are more than 200 robo-advisor companies registered in the United States, compared to just 20 in the United Kingdom and 20 in China (as of April 2017). However, the same consulting firm is predicting that the Asian market will grow rapidly and equal the size of the U.S. market by 2022. The calculations of the market statistics portal Statista also point to growth in Asia: the number of Chinese investors who use automated advisors will go from the current two million to 79.4 million in 2021.


This is another version of robo-advisors that is also popular in the United States. Companies in this category specialize in managing retirement savings. Some of the companies growing the most in this area are RobustWealth, Feex and United Income, which is especially geared toward the baby boomer generation and whose slogan is, “We are living longer. Our money should, too.”


A large estate is no longer a requirement to be able to invest and earn a profit. That’s the idea behind the micro-investment platforms, which make it possible to invest small amounts of money with no commission. The advantage of these firms – especially those geared toward millennials – is the possibility of generating savings little by little, without having to shell out large amounts of money. They tend to be apps that present investment as something simple, convenient and accessible.

“Over time, small, regular investments will become something bigger – 20 pence a day can become six pounds per month, or 72 pounds per year. That doesn’t sound like much today, but it’s better than nothing. And the micro-investment industry hopes it will become a habit that grows with millennials savings,” explained a 2016  Financial Times article on the wealthtech trend.

Traditionally, investment advisors obtained a profit from commissions on transactions and management. In these new platforms, however, these charges don’t exist. Instead, users tend to pay a $1 per month subscription. That’s how the U.S. company Stash works. Stash is a micro-investment platform that allows users to start investing with just $5. Acorns, also from the U.S., is another example. It rounds up the amount of each card payment and automatically invests the difference in the stock market.

Digital brokers

Digital brokers include online platforms and software tools that put stock market information and the possibility of investing within anyone’s reach. Some of the most successful formats in this category of wealthtech are the “social trading” investment platforms. These platforms are based on the idea that users can follow investments “just like they follow Facebook status updates,” Bloomberg explains.

Digital brokers are designed for both businesses and end users. One of the best known in B2C format is eToro, a platform available in 140 countries that puts users in contact with each other and allows them to copy the portfolios of the most successful investors in the network, in order to replicate their strategies.

Investment tools

This category includes different types of services that offer investors extra information through digital tools, either from buyers, research, or access to advice.

For example, Nerdwallet offers users the possibility of accessing a network of expert investors, comparing digital brokers on the market, analyzing their financial health for retirement or receiving research reports in a newsletter. Also in this category is Kensho Technologies, which built “the Siri of Wall Street” – a machine learning system that allows investors to access financial analysis in everyday language. The startup was chosen by Fortune as one of the best fintech companies of 2016 and has received funding from Goldman Sachs and Google Ventures.

Portfolio management

This category includes tools that help investors and financial advisors to unify and manage their investment portfolios in a single platform. They tend to let users analyze how investments are evolving, make forecasts and take decisions to optimize resource allocation to different portfolios.

Some examples are Grisbee, a French startup that offers personalized advice and monitors investors’ financial health; and Addepar, a B2B company that provides software to unify the management of different financial assets for family-run businesses, banks and financial advisors.

Other interesting stories