Open Finance – Wealth Management

Open Finance – Wealth Management

Lydia Coyle
by Lydia Coyle

We should all be trying to make the most of our money and making it work harder for us. But to 60% of all customers the process seems difficult, with a number of hurdles to cross that ultimately prevent them from investing at all.

How could Open Finance solve some of the key issues with Wealth Management?

Making investments more accessible and affordable

The number one barrier to investment is a customer-held belief that they cannot afford to invest.

A key benefit of Open Finance is bringing wealth management services to the masses and cultivating financial inclusion. There are a number of robo-advisers in the market that turn existing financial services products on their head by combining low fees with a low barrier to entry.

Plum allows you to begin investing from as little as £1, allows you to set how much you want to invest and Plum will automatically do it for you, as well as allowing you to deposit and withdraw money as little or as often as you would like.

Nutmeg’s mission from the outset has been to offer the same high-quality wealth management and investment services ‘previously only available to the very wealthy’ to many more people at a much lower cost. They deliver their wealth management, investment and financial advice services digitally to over 100,000 customers.

“At Nutmeg, our goal is to level the playing field in wealth management. By providing customers with a tech-enabled approach to their finances, we are helping people to achieve their goals and be in a better financial position today and in the future.”


Helping customers to identify suitable products

However, there is an argument to suggest that Open Finance should enable customers to find the products that are suitable for them specifically – which may not always be investment based.

OpenMoney provide a recommendation based on your personal circumstances – taking into account your entire financial landscape – and how much risk you would like to take. This recommendation will explicitly tell you whether they think investing with them is right for you, and if so what you could invest in.

Customers need to be able to trust the technology and the providers to give them safe, honest and transparent options and advice. But they also need to understand the actual product that they are buying. Further education and awareness is absolutely essential across the investment and wealth management market.

“Financial literacy in this country is at an all-time low. The idea that people that are recognised as having low levels of financial literacy can somehow make informed decisions and take the risk on themselves is just ridiculous”


Reducing the barrier to financial advice

There’s a widely held belief in the market that financial advice should be democratised and available to all. This can be achieved in two ways.

Firstly, previously mentioned roboadvisers can couple affordable entry into the investment market with readily accessible, personalised advice based on an individual’s specific financial circumstances.

Secondly, organisations like Visible Capital are helping advisers capitalise on regulatory changes and technology advances in order to get the data they need to give their customers better insights and advice.

Finally, Akoni provide a platform that allows advisers to factor in and manage cash alongside the investments. Their platform and solutions allow for automatic rebalancing and optimisation of cash portfolios and generation of tailored insights. Again allowing financial advisers to have a more holistic view of the customers’ overall financial picture and ensure greater returns.

“There’s a whole section of the market that is not getting served. There are only 4.5 million UK adults that use advisers, one in ten. Some people may have an accountant or use a PFM tool, but ultimately 90 percent of the population in the UK is not getting any financial advice from an advisor in any way.”


Read our report “Uncovering the true potential of Open Finance” for more insights and solutions being developed across the industry today!

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