Wealth management used to be an elitist world full of quarterly reports and the rich getting richer. But a new swarm of wealthtech startups are changing the game, and gearing their products towards a younger, soon-to-be-affluent audience.

And for good reason — almost 12% of the UK adult population now use at least one investment app, a number which is only expected to grow. 

But how will wealthtechs capture this valuable millennial market share? And what could stand in their way? We asked our panel of experts during our latest Sifted Talks, including:

• Diana Biggs, chief executive of digital asset wealth manager Valour 
• Benjamin Chemla, cofounder and chief executive of retail investment platform Shares
• Duncan Grierson, founder and chief executive of sustainable investment app Clim8
• Francesco Simoneschi, cofounder and chief executive of open banking platform TrueLayer

Here’s what we learnt.

1/ Fintechs changed the game

Biggs said the 2008 financial crisis was the catalyst for this new world of wealth management; mobile phones had hit the mainstream and smartphone apps would soon promise a new level of personal financial control.

While the first fintechs — like peer-to-peer lenders Zopa and Wise (formally TransferWise) — created better access to finance, it wasn’t until fintechs started partnering with banks that the companies could really scale. That kind of relationship can be seen with the new trend of open banking, where fintechs provide the infrastructure and banks provide the data, she said, but it continues to face hurdles. 

“With the fintechs that started in the 2010s, it was really the narrative of complete disruption of the financial services industry — these are the new alternatives and they were each going after a very specific segment, product or service” — Diana Biggs, Valour  

2/ We are living in a “meme economy”

Increasingly investors are getting advice from social media and the news — Chemla referenced the investment app Robinhood, on which an army of Reddit users rapidly bid up the price of GameStop shares earlier this year. Chemla said this is because historically only rich people have had access to the “right” financial information. Today, more people are able to turn to social media — and memes — to fill their education gaps.

He said that young people using the internet to learn is a bigger innovation than NFTs and cryptocurrency, because regular people have shown they can have a bigger impact on stocks than hedge funds. What’s missing, he added, is regulation.   

“It hasn’t even started yet, it’s really the beginning of a new era, we’re at the beginning of the social trading revolution” — Benjamin Chemla, Shares 

3/ Sustainable investing is a “megatrend”

According to Grierson, a massive trend right now is sustainable investing. Consumers have become far more conscious about their behaviours and the impact since the pandemic.

He claimed that where you invest your money has over 20 times more impact on the climate than other behaviours, including eating less meat and what clothes you buy.

“People are crying out for better ways to invest in things they want to get behind. Bluntly, one of the biggest trends we’re seeing right now is climate change, we’ve got Cop26, we’ve got hundreds of thousands of people in the streets with banners saying ‘let’s do something’ ” — Duncan Grierson, Clim8

4/ The future is digital, not physical

Looking at the bigger picture, Biggs said we’re likely to move more towards decentralised finance which will include lots of options, from crypto to climate funds.

This interplaying of the physical being at one with the digital is what’s called the metaverse, she said. But for decentralised finance to work, traditional banks will need to modernise or else they’ll lose out to new tech-savvy wealthtechs. 

“Going forward it’s increasingly apparent that our lives will be a mix of the digital and the physical with digital being the much heavier interface and that’s where we see this word metaverse” — Diana Biggs, Valour  

5/ Wealthtech needs more diversity

However beneficial wealthtechs have been at democratising finance, their customer base is still dominated by men. 

Biggs said to make wealthtech even more accessible, platforms needed to be easy to understand. Grierson added that education and marketing is vital in shifting the balance.

“Education is super important, also the tone of voice around your product is how you appeal to people” — Duncan Grierson, Clim8 

6/ Millennial trends are the tip of the iceberg

For Simoneschi, new behaviours like crypto may seem like a trend, but you’d be a fool to dismiss them — they signal a fundamental shift in the way financial services are consumed. 

He said we will continue to see changes in investment behaviour — and it’s on wealthtechs to keep up. 

“If you’re 20-something, living pretty much anywhere in the world, then you can very cheaply and very effectively start buying a wealth of financial assets, whether they are fully managed or you are keeping control of your own assets. — Francesco Simoneschi, TrueLayer

You can watch the full Sifted Talk here: