Wall Street firms are ready to spend on new wealth management technology, according to a report released today by Datamonitor that predicts spending on wealth management IT in North America, Europe and Asia-Pacific will reach $28.5 billion by 2012.Specifically, financial advisors are expected to increase their wealth management IT spending at a compound annual growth rate of 6.7 percent between 2006 and 2012, private banking firms 4.5 percent, retail asset management organizations 4.7 percent and retail brokerages 3.3 percent.
The types of technologies these firms are expected to invest in are a bit surprising: Internet and presence technologies will attract the most new dollars, with an 8 percent compound annual growth rate between 2006 and 2012. Next are branch infrastructure (6.6 percent), portfolio management (6.3 percent) and intermediary integration (6 percent).
The Datamonitor report suggested that as wealth managers seek greater competitive differentiation, they will look to develop an ideal wealth management platform that will be comprised of seamlessly interconnected, service oriented architecture-enabled components combined with business intelligence and analytical CRM components.
A notable case in point is Fidelity, which is investing $50 million in a new WealthCentral advisor platform that will go live late in 2008. It will incorporate Oracle's Siebel CRM applications and financial planning software from Emerging Information Systems. Advent software will provide outsourced applications for portfolio management and reporting services. The new platform should avoid the need for data re-entry as information is shared between applications, offer single sign-on and allow advisors to pre-fill Fidelity forms such as account applications.