Wealth management, private banking and robo-advisory for asset management

When managing financial assets, it is crucial to know how to choose the ideal tools according to individual needs. Today, players in this field have different solutions at their disposal that can be applied separately or in combination to achieve their clients' investment and planning goals.

In this article we explore three predominant approaches that stand out as benchmarks in guiding personal finance: wealth management, private banking and robo-advisory.

What is wealth management?

The term wealth management refers to all professional services of asset management, i.e. the set of financial services and investment strategies that are offered for the management and growth of the financial capital of individuals and legal entities. There are different types of solutions for wealth management, which differ mainly in terms of the technological components used to develop them. The characteristics of wealth management platforms can vary across the board, as they are very often tailored to the needs of each individual client, to best meet their requirements while taking into account the specific market circumstances at the time of request.

Offering these advisory services requires both financial expertise and an excellent knowledge of the investment world. Moreover, a comprehensive wealth management service may also include other types of services, such as:

• Financial planning
  Helping clients set long-term financial goals, such as retirement, children's education or home purchase, and developing a financial plan.
• Fiscal planning
  Optimising the client's tax situation through planning strategies, such as capital gains tax optimisation.
• Succession planning
  Useful for clients to plan the transmission of their assets to heirs or to charity, in compliance with tax regulations.
• Insurance services
  Advising on insurance products to protect clients' assets from unforeseen events.

Ultimately, wealth management platforms provide advisory services that can be very heterogeneous, depending on specific client needs.

Wealth management and private banking

Wealth management and private banking are both financial services that cater to individual and corporate clients with significant assets, but differ in their approach and the broad range of services offered.

In summary, both services are aimed at a high net worth audience, but while wealth management offers a broader range of financial services and more in-depth advice, private banking focuses primarily on the management of clients' day-to-day finances and bank accounts, with less emphasis on overall financial planning aspects. The two options may be offered by the same financial institution, but clients may opt for one or both services depending on their needs.

Robo-Advisory: alternative to traditional financial advice?

New technologies such as artificial intelligence and machine learning have created fertile ground for the development of new solutions dedicated to the field of asset management. These innovations have given rise to robo-advisors, i.e. tools for automated, cost-effective and algorithm-based investment management.

Often used to support the advice offered by professionals, robo-advisors simplify asset management, especially in complex financial situations or in cases of specific personal needs. It is precisely the combination of robo-advisory software and the expertise of specialists that has given rise to new approaches that blend artificial intelligence with human factors:

• Human4Robo Advisor
  The advisor defines the assets to invest in and the algorithm manages the portfolio, balancing it according to the client's needs.
• Robo4Human Advisor
  In this case, the roles are reversed: the robo-advisory platform identifies the ideal investment portfolio that is then managed by the specialist, the platforms then operate almost entirely automatically;
• Robo4Strategy Advisor
  Client profiling takes place through the use of algorithms and AI technologies that process the answers provided by the client to multiple-choice questionnaires. Products in line with the client's risk profile are selected by professionals.
• Online Advisor
  With online advisory, artificial intelligence engines are practically absent. The technological component is exclusively attributable to the digital tools used by the financial advisor.

As we have seen in this article, the ways in which financial assets are managed vary both in terms of approach and the technological components adopted. What is key to understand is which solution best meets the client's needs, in order to optimise results and minimise risks, while respecting their risk profile.