Wealth management is a general term that defines any effort to make the most out of a principal sum of money. In other words, wealth is relative; managing a retired teacher’s modest nest egg counts as wealth management.
While wealth management is broad in terms of scope, the nature of wealth management is not so universal. Managing a $100,000 portfolio and one worth $1 million requires two different approaches.
Looking at it mathematically, a million-dollar portfolio is ten times that of one worth $100,000. Simply put, one could assume that the larger portfolio requires 10x the effort but as you may imagine, it’s more sophisticated than that.
Enter financial technology. Fintech plays a decisive role in the modern-day approach to high net worth wealth management. Defined as $1 million or more, high net worth portfolios are inherently more complicated but allow for a much larger amount of opportunity for growth. Utilizing fintech minimizes the risk and maximizes the return one sees when putting such large sums of money to work in various markets and investment schemes.
With this in mind, let’s take a look at specific ways in which fintech helps manage million-dollar portfolios:
Insights
Taking hard-earned, cold-hard cash and putting it to work in various markets can be a stressful experience. But thanks to fintech, individuals can put themselves in the virtual driver’s seat. By using these tools, elusive insights are now more readily available and can be used as needed. While it doesn’t remove risk from the equation, it makes high net worth wealth management easier to comprehend and appreciate from the client’s perspective.
Customization
There’s no such thing as a one-size-fits-all approach to wealth management. Customization is ideal, especially when it comes to managing million-dollar portfolios. Once its own premium feature, customization is now commonplace, thanks to developments in financial technology. Individuals now have the option to eliminate certain stocks and investment options from ever infiltrating their wealth management strategy. These specifications stick to the portfolio like glue for the duration of the arrangement.
Optimization
The human brain is the single most sophisticated construct ever observed in nature. But it’s far from infallible. In years past, it was always an issue of human biases at play against what data was actually representing. It got the job done, but it was never ideal. We always knew that computers had the potential to do better, but the technology remained beyond our grasp. Those days are over. Sophisticated fintech software can now do the job of 1,000 financial analysts at once. It’s a quantum leap that’s become a game-changer for those seeking ways to turn a million-dollar portfolio into a multi-million-dollar fortune in a relatively short amount of time.
Augmented Advisory
The last section included some shade thrown at financial advisors and analysts. We want to make it clear there was no harm intended; there remains a critical role for people to play in the world of finance. The key development comes down to how the job of a financial advisor is now augmented by fintech. These men and women now have the ability to navigate the complicated world of wealth management with the help of advanced artificial intelligence. Every step they recommend is backed by the data provided by these modern-day systems.
Flexibility
Times change. The things we took for granted in the past become obsolete before we know it. You need only look back on the past two decades to know this is true. All this adds up to financial risk when dealing with large sums of money put to work for an extended period of time. But thanks to advances in fintech, portfolios have a level of flexibility in relation to changing times. Individuals can tweak their plans down the line to better fit the future. It doesn’t render risk obsolete, but it does provide individuals with a surfboard to ride market waves versus floating helplessly.
There are different degrees of wealth management, inherently based on the amount of wealth in question. For those with a million or more available for investment, fintech is a way to do so with minimal risk and maximum return. What’s not to like about that?
Julie Steinbeck is a freelance writer from Florida. She enjoys covering topics
related to business, finance, and travel.
