As competition intensifies and the industry continues its digital transformation, wealth technology budgets are expected to keep growing.

The following article is part of the 12th WealthBriefing Technology and Operations in Wealth Management Research Report. It comes from Alpha Financial Markets Consulting. The author is Joe Nestlerode (pictured), a partner at Alpha FMC.

Joe Nestlerode

In recent years, wealth management firms have undergone significant changes in their operations, driven by evolving client expectations, regulatory pressures, and advancements in digital technologies. As a result, technology budgets in wealth management have soared, with firms increasingly allocating more resources to digital transformation and automation. Banks, wirehouses, independent broker-dealers (IBDs), and registered investment advisors (RIAs) are all ramping up their tech spending to streamline operations and stay competitive in an environment where clients expect a seamless, digital experience.

In the 12th Technology and Operations Trends Report 2024 this trend was highlighted, revealing that nearly 84 per cent of wealth management professionals expect their technology budgets to increase, with 33 per cent anticipating significant increases in the coming years. This surge in technology spending reflects the industry's ongoing transformation.

Wealth management was slow to adopt new technologies, as firms were fearful that advisors would lose their connection with clients in a digital world, Firms were also worried about information security in a cloud environment. However, those concerns are largely in the past, and today, firms are racing to modernize their technology stacks to keep up with both client demand and competitive pressures.

The most significant driver of expanding wealth technology budgets is the push toward digital transformation. As wealth management firms look to modernize their operations, the demand for more sophisticated, tech-driven services has grown significantly. Technologies such as artificial intelligence (AI), machine learning (ML), data analytics, and cloud computing have become essential components of wealth managers' infrastructure. 

These tools allow firms to offer personalized investment strategies, enhance client engagement, and automate processes that were once manual and time-consuming. Integrating these technologies across both front- and back-end operations has become crucial for staying competitive in an increasingly digital world.

Today's investors are more tech-savvy and expect tailored experiences that reflect their individual needs, preferences, and financial goals. In response, wealth managers are investing heavily in advanced client relationship management (CRM) systems, digital onboarding platforms, and mobile-first solutions that offer clients seamless, on-demand access to their portfolios, performance metrics, and personalized advice.

These technologies not only improve the client experience but also provide wealth managers with real-time insights into client behavior, enabling them to refine investment strategies and strengthen relationships.

When surveyed by WealthBriefing about how their technology budgets are being spent, respondents confirmed that enhancing digital client experiences ranked highest at 53.9 per cent, followed by focusing on new CRM systems at 50 per cent, improving client lifecycle management at 49 per cent and expanding data platforms and cloud computing capabilities at 46.2 per cent. These investments reflect the broader trend toward personalization, automation, and better data management in the industry.

Regulatory pressures also play a significant role in the expansion of wealth technology budgets. With global regulatory standards such as GDPR in Europe, MiFID II in the EU, and Dodd-Frank in the US, wealth management firms must ensure that their technology systems can meet compliance requirements. This includes secure management of sensitive data, maintaining transparent transaction records, and being able to respond efficiently to audits or regulatory inquiries. As a result, firms are increasingly turning to regulatory technology (RegTech) to automate compliance processes and ensure that they stay aligned with evolving regulations.

As competition intensifies and the industry continues its digital transformation, wealth technology budgets are expected to keep growing. This signals a permanent shift in how wealth management firms operate, deliver value to clients, and adapt to changing market conditions. The future of wealth management lies in the ability to leverage technology to create personalized, efficient, and scalable solutions that can meet the ever-evolving needs of today’s investors.

By embracing digital tools and modernizing their technology stacks, wealth management firms can enhance the client experience, streamline operations, and remain competitive in a rapidly changing landscape.

The author
Joe Nestlerode is a partner at Alpha FMC and a technology leader with 28-plus years in financial services in the US. He specializes in technology platform integrations, APIs, fintech solutions data solutions and information security. Nestlerode has a deep background in the Independent wealth managers' space having held roles in both business and technology. He works closely with clients to overcome challenges and achieve strategic objectives.

To download a copy of the Tech & Ops report, click here.