The WEALTHTECH Book

An Industry Driven by Digital, Data and Artificial Intelligence

By Alpesh Doshi

Managing Partner, CEO, Fintricity

The Old Guard

With the turmoil of 2008, we saw a microscopic lens fall upon the financial services industry. Investment banking and capital markets were primarily the areas scrutinized by the regulators, governments and the general public, and the so-called “casino banking” that took place. The banking industry had never had it so good, with previous deregulation and trading freedoms to invent financial products which benefit both industry and investors.

However, the most likely to suffer in the market, either directly through defunct mortgages or through mutual funds or other collective investment vehicles, were investors. Investors in this context include pension funds, mutual funds, family offices, sovereign wealth funds, high-net-worth individuals (HNWIs) and retail clients.

The asset and wealth management industry was largely seen as a victim, rather than part of the problem. If we look at the performance of asset management over the past 30 years, we have consistently seen the underperformance of active management. With fees considered, a large majority of the funds have not, on average, delivered good performance over their lifetime. Fundamentally, the industry has “no economic justification for being as large and rich” as it is.¹ It has made fund managers and fund management company owners wealthy, but the investors who pay their fees have not had their ...