Wealthtech_Business_Model_141767_1666249897

Wealthtech
Business
Model
Licensed to Outis Nemo Ltd , barnabas@outisnemo.com

SUPER GUIDE:
Wealthtech
Business
Model
BY DANIEL PEREIRA

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The Business Model
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TABLE OF CONTENTS
Introduction 12
What Is Wealthtech 14
Relationship Between Wealthtech And Fintech 15
History Of Wealthtech 17
Stage 1: Origin Of Wealthtech 17
Stage 2: Growth Of Wealthtech 17
Stage 3: Consolidation Of Wealthtech 18
Types Of Wealthtech Companies 20

Digitized Finance Companies With Wealthtech Products20
Technology Providers 20
Trading 21
Social Trading And Digital Brokers 21
Cryptocurrency Exchanges 22
Marketplaces 22
Investment Tools 22
Compliance And Regtech 23
Financial Advisors 23
Robo-Advisors 24
Robo-Retirement 24
Quant-Advisors 24
Lending And Crowdfunding 25
Micro Investments 25
Wealthtech Solution Market Overview 27
Key Market Players 29

3rd Eyes Analytics 29
Adviscent 29
Alphaswap 29
Investsuite 30
Objectway 30
Scalable Capital 30
Additiv 30
Orion 31
Personal Capital 31
Moneyfarm 32
Nutmeg 32
Etoro 32
Zen Assets 33
Cashboard 33
Taviq 33
Vaamo 34
Betterment 34
Why Use Wealthtech Solutions? 35

Growing Business Benefits Your Clients 36
The Right Wealthtech Can Streamline An Asset Manager’s
Job. 36
Reduced Costs For Wealth Management Companies 37
Process Acceleration For A Better Client Experience 37
Manage Large Numbers Of Data Simultaneously 38
Objective Process Management 38
Better Transparency And Risk Management 39
Security Risks 39
The Wealth Management Technology Sector 40
Portfolio Management Tools 40
Automated Rebalancing Tools 41

Compliance Tools 41
What Does Wealthtech Mean For The Financial Services

Industry? 42
Why Wealthtech Is Important For Advisors And Wealth

Management Firms? 44
How Wealthtech Platforms Solve The Financial Literacy

Gap Faced By First-Time Investors? 46
Wealthtechs Bridging The Gap 46
Asset Allocation And Portfolio Rebalancing 47
Case Studies Of Wealthtech Business 49

Scalable Capital Business Model 49
Who Is Scalable Capital? 49
How Does Scalable Capital Work? 50
What Products Does Scalable Capital Offer? 51
Scalable Capital Individual Savings Account 51
Scalable General Investment Account 52
Scalable Capital Sipp 52
What Is Scalable Capital's Investment Strategy? 52
How Does Scalable Capital Manage Its Portfolios? 53
Scalable Capital Performance 54
What Are Scalable Capital Fees? 54
Investsuite Business Model 55
How Investsuite Work 55
Intake 55
Design 56
Set Up And Implementation 56
Personal Capital Business Model 57
What Is Personal Capital? 58
A Short History Of Personal Capital 58

How Does Personal Capital Work? 60
How Does Personal Capital Make Money? 61
Investment Services | $100,000 To $200,000 62
Wealth Management | $200,000 To $1 Million 62
Private Client | $1 Million Plus 62
What Is The Funding And Valuation Of Personal
Capital? 62
What Is The Revenue Of Personal Capital? 63
Success Story Of Personal Capital 63
Etoro Business Model 65
What Is Etoro? 66
A Short History Of Etoro 66
How Does Etoro Work? 67
How Does Etoro Make Money? 68
Spread 68
Withdrawal & Conversion Fee 69
Overnight And Weekend Fees 69
Inactivity Fee 70
Success Story Of Etoro 70
What Is The Funding & Valuation Of Etoro? 71
What Is The Revenue Of Etoro? 72
Betterment Business Model 72
What Is Betterment? 73
How Does Betterment Work? 73
How Does Betterment Make Money? 74
Advice Packages 75
Digital & Premium Plans 76
Betterment For Advisors 76
Betterment For Business 76
Checking Account 77

Cash Reserve 77
Cellphone Insurance 78
Success Story Of Betterment 78
What Is The Funding And Valuation Of Betterment? 79
What Is The Revenue Of Betterment? 79
Charles Schwab Business Model 80
What Is Charles Schwab? 80
A Short History Of Charles Schwab 81
Business Model Canvas Of Charles Schwab 81
Customer Segments 81
Individuals 81
Corporations 82
Value Propositions 82
Its Industry Standing And Reputation 82
Its Technical Expertise And Experience 82
Its Customer Service And Personal Care 82
Its Broad Range Of Investment Products And
Financial Services 83
Customer Relationships 83
Key Activities 84
Key Partners 85
Key Resources 86
Cost Structure 86
Revenue Streams 87
How Does Charles Schwab Make Money? 88
Interest Revenue 88
Asset Management And Administration Fees 89
Trading Revenue 89
Bank Deposit Account Fees 90
Other Revenue 90

What Is The Charles Schwab Business And Revenue
Model? 90
Acorns Business Model 91
What Is Acorns? 91
How Does It Do This? 91
A Short History Of Acorns 91
How Does Acorns Work? 92
How Does Acorns Make Money? 93
Subscription Fees 94
Interest On Cash Balance 94
Management Fees 94
Referral Fees 95
What Are The Features Of Acorns? 95
Acorns Invest 95
Acorns Spend 95
Acorns Later 95
Acorns Early 96
Acorns Earn (Found Money) 96
Success Story Of Acorns 96
What Is The Future Growth Strategy Of Acorns? 98
What Is The Revenue Of Acorns? 98
What Is The Funding And Valuation Of Acorns? 98
Wealthfront Business Model 98
What Is Wealthfront? 99
A Short History Of Wealthfront 99
How Does Wealthfront Work? 100
How Does Wealthfront Make Money? 100
Advisory Fee 101
Loans Against A Portfolio 102
529 College Savings Plan 102

Cash Accounts 103
What Is The Funding & Valuation Of Wealthfront? 103
What Is The Revenue Of Wealthfront? 103
Success Story Of Wealthfront 103
4 Trends In Wealthtech 106

High Personalization 106
Seamless Ux 107
Cybersecurity 107
Wealthtech Ecosystem 108
Marketplaces 110
Investment Tools 110
Compliance 110
Financial Advisors 111
Robo-Advisors 111
Quant Advisors 111
Trading Platforms 111
Algorithmic Trading 111
Social Trading/Investment 111
Micro Investing 111
B2b Software Providers 112
Big Data Analytics 112
Future Of Wealthtech Business 113

Prediction 1: More Community-Focused Platforms 114
Prediction 2: Crypto And Nft Are Here To Stay. 115
Prediction 3: Impact Investing Is On The Rise. 115
Prediction 4: Wealthtech Platforms For Groups 116
Prediction 5: More Tech For Wealthtech 116
Prediction 6: The Wealthtech Growth Story Continues 117
Prediction 7: Challenging Period Ahead 117

Future Technologies In Wealthtech 118
Extensive Adoption Of Cloud Technologies 118
Introduction To Quantum Computing 119
Technologies For Social Impact 119
Use Of Automated Advisors 120
Integrating Blockchain Into Wealthtech 120
Conclusion 121
References 121
About The Author 126

INTRODUCTION
Before now, management of wealth and investments was a
job for highly skilled professional consultants. These
professionals were trained to oversee and analyze assets and
savings. They were also tasked with managing the variety of
investment strategies for the wealth generated. However,
these services were reserved for large and affluent
companies.
This exclusivity posed a problem for individuals and less

qualified professionals who needed personal management
and sought to grow wealth and financial stability through
effective investment strategies while minimizing risk.
This is where WealthTech comes in. The revolution of

WealthTech began half a decade ago with an initiative to
integrate digitalization with the investment and wealth
management sectors.
Their new understanding of personal savings and asset

management made WealthTech capable of utilizing
technology to implement strategies that would make
self-management and equity investment financial services
possible for corporations and individuals who were once in
the minority.
But the question is, what is WealthTech and what role does it
play in the finance sector and wealth management? In this
in-depth analysis of the WealthTech business model, we will
share with you everything you need to know about the
industry.

WHAT IS WEALTHTECH
To understand what WealthTech is, we must first define wealth

management. Wealth management is an investment advisory
service offered by financial advisers to their wealthy clients to
solve, grow, preserve, and protect their wealth while
improving their financial condition.
With that same logic, WealthTech is the use of technology in

wealth management to provide innovative and disruptive
digital solutions for the investment and asset management
industries.
It is the integration of innovative technology with the financial

sector to improve the management of assets and
investments. This integration enables it to compete with
traditional wealth management organizations by making the
solutions used in the management of assets more efficient
and automated.
WealthTech allows its users to utilize the latest in technology

to gain insights and show the inner workings of an industry
meant for wealth creation in ways that weren’t possible
before. It also provides financial advice through AI, machine
learning, advanced application of big data, micro-investment
platforms, or trading solutions based on social networks. This
in turn resolves the problem of upgrading business models
and growing wealth.

Relationship between
WealthTech and Fintech
WealthTech and Fintech are severely interconnected and are
both held to the same regulatory framework and objectives.
And although WealthTech is mostly considered a subdivision
of Fintech in the same manner that wealth management is
considered a subdivision of finance, we must be careful not
to over-converge the pair as each is distinctively different
from the other.
In the financial sector, companies must comply with KYC

(Know Your Client) requirements and online operations in
investments, which are controlled under a series of
regulations that ensure the safety of both users and clients as
well as organizations, institutions, and companies.
On that note, both Fintech and WealthTech are regulated

under the same framework and must conform to AML
(Anti-Money Laundering) regulations such as AML6 (Sixth
European Money Laundering Directive) and eIDAS (electronic
IDentification, Authentication, and Trust Services), which gives
the fundamental regulatory framework concerning online
financial, banking, and investment operations. However,
these are not the only frameworks required to be able to offer
online services within the finance sector.
Although WealthTech and Fintech work alongside each other,

there is a clear difference between them, especially in their
business models and their advertising and commercial
proposals.
To draw up a rough comparison between the two, consider

Fintech as an investing platform that allows customers to

purchase and sell a wide range of assets. It enables them to
get hands-on with their investment portfolios and become
active individual investors, all while increasing their wealth.
WealthTech, on the other hand, allows its customers to
participate in the stock market while also taking into account
their long-term financial objectives, risk tolerance, and
investment horizons. It does not allow its customers to trade
individual stocks (or other asset classes), instead using
algorithms to invest in passive funds. It treats its consumers
as though they are wealthy individuals.
The two have now become interconnected when FinTech

businesses collaborate with WealthTech firms to provide
investment services to customers, for which they receive a
fee by operating as business partners.

HISTORY OF WEALTHTECH
In recent times, there has been a characteristic incentive to

digitize all aspects of our economy and finances, and now
with the emergence of WealthTech, the wealth management
sector has joined the race. But how did it all begin?
Stage 1: Origin of WealthTech

Looking back into the history of the wealth management
industry, way before WealthTech became a thing in 2008,
there were algorithmically driven investment platforms and
services like Edelman Financial Engines, which was created
in 1996 and can be considered the first robo-advisor. It used
to provide retirement planning and fund-picking software for
its users, and other software-supported wealth managers at
the time.
Stage 2: Growth of WealthTech

However, in 2008, there was a breakthrough in wealth
management with the release of Betterment’s platform, which
marked the initiation of the WealthTech movement. And as of
2022, Betterment is the largest global robo-advisor platform.
In 2008, another platform, called Wealthfront, also went live.
Betterment was launched around the same time as the 2007

Global Financial Crisis, which led to many investors’ portfolio
values dropping by as much as 30%. Many believe that it was
this crisis that inspired the motive behind Betterment
because people were desperate for new ways to control and

stabilize their financial situation in such a difficult time.
Apart from the crisis, which was beyond a doubt part of the
equation, it appears that the convergence of new consumer
technology played a bigger role. And this particularly includes
the release of the first iPhone back in 2007 and the newly
found independence of the tech industry.
When merged, the difficulties many businesses had to tackle

were exposed to solutions and new channels that conveyed
these solutions. App-delivered services were possible for the
first time, through sophisticated software and hardware that
were now in the pockets of consumers and no longer limited
to bulky systems.
In 2011, yet another robo-advisor, but London-based this time,

was introduced, and it was coined Nutmeg. Other
robo-advisors sprung up in the following years, including
Wealthsimple (Canada), Scalable Capital (Germany),
TrueWealth (Switzerland), Stockport (Australia), 8 Securities
(Asia-Pacific), and Moneyfarm (Italy). There are an estimated
100 robo-advisors around today.
In 2012, micro-investing pioneer Acorns was founded, and

Stash followed quickly in 2015. The robo-retirement company
RobustWealth was also launched in 2015, but ended up being
absorbed into its parent company in 2021.
Stage 3: Consolidation of
WealthTech
By 2020, most of the world's largest financial institutions had
incorporated robo-advisory technology as part of their
products, but it was also around this time that we saw a

significant change in their digital advice strategy.
Consolidation began, and a lot of the more successful
robo-advisors were bought out for substantial amounts of
money. In 2021, JPMorgan purchased Nutmeg for about $5
billion, while USB acquired Wealthfront a year later for $1.4
billion.
And this brings us to the present, where the best WealthTech

startups have validated their business models and have
attracted the attention of some of the biggest players in the
financial world.

TYPES OF WEALTHTECH
COMPANIES
WealthTech is not one thing in particular, but rather the

interrelation of a collection of key players within the sector
that act as a coordinated mechanism that shapes up a
thriving industry to obtain impressive results.
But the question remains, how is this accomplished? Below is

a general summary of the many types of WealthTech
companies available:
Digitized finance companies

with WealthTech products
It was only recently that traditional banks and Fintechs started
to offer WealthTech-native autonomous investment services
to their users. However, they were the first in the finance
sector to take the initiative to make an active step towards
the digitization of their activities and were the pioneers of the
financial services we all know today.
Technology providers
These are tech providers that have either developed
technologies that make it possible for entrepreneurial
businesses to implement the business models that they have
already generated for other WealthTech companies. Or that

have developed products that create WealthTech solutions for
their users, which they can use to create businesses or
product ranges themselves.
With digital onboarding solutions such as KYC (Know Your

Customer), anti-fraud controls and identity verification, the
electronic signature for contracting, or certified
communication for secure and supported customer relations,
these technologies enable these businesses to operate,
grow, and stand out.
Trading
Trading platforms are reinventing personal finance and
wealth management because they utilize the best digital
solutions that have created a window for them to optimize
their conversion rate through onboarding processes that
make them gain more and more users in all markets without
any risk.
Everyone is aware of the amount of advertising that these

platforms have been doing recently. And the fact that they
can afford such marketing investments only goes to prove
their rapid growth.
Social trading and digital

brokers
With the aid of wealth technology, anyone can reuse the
investment strategies and portfolios of successful brokers as
well as those of friends, family, or role models. Through
forums, telegram groups, and communities, social networking
is encouraged and utilized for the trading of ideas, tips, and
initiatives. Now, anyone can copy the investment methods

and portfolios of the most experienced brokers, as well as
those of their friends.
From online platforms to software tools, digital brokers bring

stock market information and opportunities within anyone’s
reach. The latest innovation is “social trading", which allows
users to follow their investments like “Facebook status
updates”.
Cryptocurrency Exchanges
These platforms operate like traditional trading platforms, but
their focus is on crypto assets. Although numerous trading
platforms already support cryptocurrency trading, it is the
expertise of these specialists that distinguishes them.
Marketplaces
These platforms are tasked with tracking investment services
and providing comparative studies of the market. These
comparative portals aid in making data-driven judgments, as
well as facilitate investment activity through the use of
automation and information extraction.
Investment tools
These tools are a B2B segment of wealth tech solutions.
They are used by more professionals than average users.
These application kits monitor portfolios, notify users of
changes or when targeted returns are met, and offer access
to networks of advice. They also provide extra information to
investors through digital tools, either from buyers, research,

or access to advice.
Portfolio management solutions help financial institutions with

asset class analysis, and with the help of automation and
organization, they also increase the efficiency of most tasks.
Compliance and RegTech

The regulators of each industry have a set of legal norms and
standards that must be met by all its sectors. WealthTech is no
exception to this rule. Like the rest of the financial sector,
WealthTech must follow the technical and legal norms that
have been set to regulate its activities. To that end, RegTech
has developed digital business solutions that automate
compliance with the most demanding standards and are
seamlessly integrated into the sector's business operations
and processes.
Financial Advisors
Companies in this category provide specialized software to
aid in the adoption of digital wealth management and
investing practices. They offer digital and online financial
guidance to the user that was previously done in traditional
onsite banking. There are those that conduct operations and
those who simply encourage their clients to conduct
operations on other platforms. This category includes
companies like Plaid Technologies, which is a software
intermediary that securely connects financial application
clients with their own bank accounts.

Robo-Advisors
This is by far the most popular wealth technology available.
Robo-advisors automate financial investments by providing
online financial advice or investment management with
minimal to no human interaction. These programs use
machine-learning algorithms to generate profitable
investment options and yield targets depending on the user's
risk aversion profile and other variables such as age and
income. Passive management can be set up to be automated
and to function as the client based on the settings that the
client specifies.
Robo-advisors are replacing traditional financial advisors and

portfolio management by driving down prices and targeting a
far larger audience. They can generate revenues with lower
margins and increased transaction volumes.
Robo-Retirement
This is a type of robo-advisor. Robo-retirement solutions
handle retirement savings, which are also quite popular in the
industry. This category includes businesses that specialize in
managing consumers' retirement funds. In contrast to human
financial planners, robo-retirement platforms develop
retirement portfolios, manage assets, provide strategies, and
recommend plans generated by a computer system.
So, because this is a retirement plan idea, it is based on a

format appropriate for the baby-boom generation and with
simple interfaces, though it is suited for any user.
Quant-Advisors
This is used when technology is carried to its logical

conclusion and put to use in the service of trading and
brokers. Artificial Intelligence, Big Data, and Machine
Learning collaborate to foresee changes, and independently
adapt the settings that the user supplies to the robo-advisers
to increase their performance, and therefore conduct
effective operations. Algorithmic trading, which runs
alongside them, makes them work in real time.
Lending and crowdfunding

Crowdfunding is a method of raising funds to sponsor
initiatives and enterprises. It allows fundraisers to collect
funds from a huge number of individuals using online
channels. Crowdfunding is most commonly utilized by
startups or emerging enterprises to seek alternative funds.
Lending-Based Crowdfunding is a crowdfunding strategy in

which investors provide capital in the form of modest loans
and earn returns through interest payments from borrowers.
These participatory funding solutions are not new, but they
have been added to the WealthTech ecosystem to round out
the offering and reach more customers.
Micro investments
A micro-investing platform is an application that allows users
to save small amounts of money regularly. Micro-investment
platforms aim to reduce traditional barriers to investing, such
as brokerage account minimums, and encourage people to
invest even if their income and assets are restricted.
You can either automate the process by allowing the platform

to manage your portfolio based on your particular
preferences, or you can choose your EFTs and equities.
Micro-investing, when given this option, gives a more

interactive experience than employing a robo-advisor.
Platforms have been built to bring together various projects,

ranging from microcredit granting to P2P (Peer to Peer)
models.

WEALTHTECH SOLUTION
MARKET OVERVIEW
WealthTech solutions are centered on wealth management.

Companies and organizations of various sizes use them to
achieve their financial objectives. Wealth tech solutions
successfully integrate the digital sphere with the financial
management sector by utilizing cutting-edge technologies
such as artificial intelligence and big data.
WealthTech solutions not only provide an alternative to

traditional wealth management organizations, but they also
have several other advantages. These benefits include cost.
transparency, effective portfolio management, improved
client service, and increased asset liquidity.
They are not restricted to this, as they also focus on digitizing

customer relationship management, retirement savings,
comprehensive financial data analysis, and
process/outsourcing automation. In addition to dealing with
complex tax planning, cash flows, legacy planning, and estate
planning,

KEY MARKET PLAYERS
3rd Eyes Analytics

This Swiss financial technology company provides financial
institutions with digital solutions that let them use realistic and
scenario-based asset-liability management methodologies.
These methods provide modular and flexible, white-labeled
Software-as-a-Service and API solutions that improve,
automate, and visualize wealth planning interactively.
Adviscent
This firm focuses on innovative investment content
management and dissemination solutions for advisory
procedures. Driving revenue by delivering the appropriate
content at the right time and in the right format to the right
client. It assists research analysts, investment writers, sales
managers, and other content owners in producing, managing,
and distributing financial material. It allows users to use and
synchronize content from the investment office, research, and
offering departments across the client relationship lifetime. Its
brilliant content solutions extend client advisors' reach and
impact while ensuring personalization at scale.
AlphaSwap
This investment technology platform bundles its analyst
community’s best equity investment robo-adviser ideas for
institutional customers into Data-as-a-Service customers.

InvestSuite
Through its AI-based digital investment solutions, this B2B
WealthTech startup helps financial institutions speed up their
digital wealth transformation. It provides a complete,
customizable solution that provides a digital investment
product that financial institutions can give to their clients.
ObjectWay
This company provides software platforms for asset and
investment management to the financial sector. It offers its
clients omnichannel and omni-device solutions. Through
integrated digitalization, its management and onboarding
solutions improve the client experience and client
interactions. The solution handles the complete client life
cycle, from prospecting to onboarding, as well as continuing
service delivery such as compatibility reviews and other
periodic and ad hoc events.
Scalable Capital
This digital wealth manager uses technology to simplify asset
management and make investments more affordable.
Customers can use the robo-advisor to invest their money
and trade actively with the broker. It provides a platform for
retail investors to trade stocks, funds, and ETFs.
Additiv
Additiv enables financial organizations to benefit from
digitization. Its DFS technology enables financial institutions
to quickly launch innovative products and maximize client

engagement. To satisfy the increased need for financial
decision support, it enables its customers' clients to employ a
user-friendly and scalable financial simulation engine. It
provides financial managers with sustainability insights to
help them develop smarter portfolios, deliver better client
assistance, and simply comply with regulations.
Orion
Orion is a platform for advisory firms aiming to expand,
strengthen client connections, acquire a competitive
advantage in a crowded field, and establish strong,
successful businesses. Their technology-enabled trustee
approach alters the advisor-client relationship by allowing
financial advisors to prospect, plan, invest, and achieve in a
single, connected technology-driven experience.
This technique enables advisers to recruit new customers,

more meaningfully relate goals to investing strategies and
outcomes, and ultimately track progress toward each
investor's personal definition of financial success.
Personal Capital
This digital asset manager and robo-advisor offer a full set of
free financial planning tools for investment management,
retirement planning, and cash flow. It also provides access to
a high-interest savings account as well as a variety of free
banking services.
For high-net-worth individuals and families, they provide

individualized investment management services as well as a
licensed financial planner.

Moneyfarm
Moneyfarm is an online investment firm that uses a digital
asset management platform to offer low-cost independent
investment advisory services to small investors.
The company's technology enables it to generate a unique

profile for each customer depending on their investment goal
and risk tolerance. It has a team that is tasked with monitoring
the investment condition and making recommendations to
rebalance portfolios based on market trends.
Nutmeg
Nutmeg is an online investment management service that
makes all investment decisions on its customers' behalf
rather than providing a trading platform. Customers' funds are
invested per their investment objectives and risk appetite. It
primarily, but not entirely, invests in listed securities, debt,
cash, commodities, and other investment asset classes
through exchange-traded funds (ETFs). It offers an online
alternative to stockbroker platforms that allow users to make
their own trading decisions.
eToro
eToro is a multi-asset brokerage firm that provides social
trading solutions through its community-powered network.
These technologies allow investors to view, follow, and
automatically duplicate other investors' actions in real-time.
They create a more straightforward, transparent, and
profitable way to trade and invest online.

Zen Assets
This online wealth management tool is only available to rich
private clients and boosts investment returns by up to 40%.
The firm offers customized, well-diversified, and highly liquid

investment portfolios. The platform integrates portfolio
management with investment products to provide clients with
higher returns. It boosts investment returns by lowering the
cost of professional asset management.
Cashboard
This web platform allows retail investors to invest in a
personalized and scientifically diversified portfolio. This
portfolio combines current asset classes such as
equity-based crowdfunding, social lending, and social trading
with classic assets such as stocks, funds, and options.
Through their modern portfolio theory, investment decisions
are fully automated.
Taviq
Taviq is a WealthTech financial operator within the WealthTech
sector. It offers private bankers web software that assists
them in converting prospects into new paying clients. The
software not only collects information about the client's
demands, but also creates a personality profile using user
behavior analytics. These results are forwarded to the
adviser, who can then prepare for the encounter and
determine what tone of communication to use with this
possible customer. Finally, the bankers can determine which
person is best suited to meet with this new client.

Vaamo
This robo-advisor is intended to show investors how close
they are to meeting their objectives and how their deposits
accumulate over time.
Its primary goal is to provide private individuals with
straightforward access to capital markets. It is focused on
personal financial goals like early retirement or children's
schooling. Vaamo allows its users to invest their money
profitably and at the lowest possible cost. This is
accomplished by providing clients with relevant counsel and
advice.
Betterment
Betterment is a great solution for anyone who wants to
develop their wealth without having to spend a lot of time
managing it. It provides its customers and businesses with
financial, retirement, and cash management products. It also
offers financial counseling, and its EFTs comprise equities
and bonds from its portfolio.

WHY USE WEALTHTECH
SOLUTIONS?
The goal of wealth management firms is to retain old and

acquire new clients through the provision of financial advice
or guidance to customers. These firms help clients protect
and grow their wealth, often going beyond simply providing
advice on their investments or designing a financial plan for
them.
It has been noted that traditional wealth management

methods alone aren't enough to satisfy clientele. Adopting a
hybrid model of wealth management enhances the offerings
of wealth managers in reporting, regulation, client
onboarding, and investment execution. Below are reasons
why WealthTech Solutions are worth adopting.

Growing Business Benefits
your Clients
Financial management firms, like any other company, benefit
greatly from steady business growth. An increase in revenue,
an attractive portfolio, and business expansion are all
advantages of business growth. Aside from the benefits the
firm reaps, investors also enjoy more efficient customer
service, more precise financial reports, and an enhanced
customer experience, among other benefits.
Traditional financial advisory services in modern times have

shown that branding is simply not enough to retain clients
and attract new customers in new markets. Existing clients
want results, and new investors need a steady hand to guide
them through financial processes. Overall, client experience
and client engagement are key to bringing customer
satisfaction, and firms integrating WealthTech into strategic
planning will see favorable results.
The Right WealthTech can

Streamline an Asset Manager’s
Job.
Implementing faster and easier processes without reducing
the quality of customer experience is integral to the efficient
running of an organization. This is purely th purpose of
streamlining; plus, adopting WealthTech tools assists in this
field.

In traditional financial management models, much time is
often wasted on back-end operational tasks, which leaves
less time with clients; a strategy that ruins the customer
experience. The biggest digital solution WealthTech provides
to this problem comes in the form of the data and application
programming interface (API) WealthTech provides. An API
establishes an online connection between a data provider
and an end user. APIs are essential to implementing an
automated trading strategy, which allows financial managers
to streamline mundane, manual processes.
Merging technology and human capabilities is important for

the financial sector, as digital solutions make up for human
flaws and give rise to better customer service methods.
Reduced Costs for Wealth

Management Companies
In this era of technology, many fears that WealthTech
threatens job security in the financial sector. However, it is
clear that investors value interactions with human advisors,
and WealthTech is simply a tool for improving customer and
even staff experience. That said, manpower shortages are a
problem for financial firms as well as revenue loss for a wide
array of staff. WealthTech allows companies to work around
staff shortages and cut costs significantly.
Process Acceleration for a

Better Client Experience
For every successful business, a quality customer experience
sits at the forefront. Offering clients the best experience not

only solidifies the already existing clientele, but also attracts
new clients. For financial managers, professionalism,
efficiency, and a friendly demeanor are key to attracting and
keeping investors. In addition to that, with the right
WealthTech tools, clients are delivered a stress-free, smooth
experience. Also, automation and integration through
WealthTech allow for streamlining of back-end tasks, which
gives advisors more space to engage directly with investors
and communicate clearly with clients. Process acceleration
solutions through WealthTech are small details that enhance
the customer experience.
Manage Large Numbers of Data

Simultaneously
Data collection and presentation are important parts of
financial management. Financial advisors collate precise
market data, income, and expenditure, as well as others, and
present them to clients. This process proves to be somewhat
difficult without digital technology because it is difficult for
humans to immediately keep up with market changes the
moment they come to light and track data with pinpoint
accuracy. With the portfolio management tools and other
innovative tools that come with WealthTech, financial advisors
can access client positions and history in no time at all with a
simple scroll through a laptop or phone. This eliminates
unnecessary errors and allows for accuracy. It also
accelerates the speed of transactions and makes for an
efficient working pace.
Objective Process Management

For financial advisors, effective IQ-based decision-making is
important to help clients make good investments. More often

than not, new investors work on emotion-based judgment
and end up losing money. A financial advisor has to help the
client keep a level head when it comes to investments. To do
this, advisors need to organize their research processes and
get the data to function as a single coherent, consistent unit.
WealthTech tools stand as a solution when it comes to
keeping clients' funds safe and data reliable and organized.
They also aid in the growth of funds, the reduction of the
income tax burden, the facilitation of retirement planning, and
the personalization of clients' needs; all of which are critical
processes that financial advisors must not overlook. These
solutions promote efficiency, as good financial management
means continually monitoring and optimizing client funds,
Better Transparency and Risk

Management
Investing is not always smooth sailing, and every investor and
financial advisor is aware that it comes with risks. Of course,
taking care to access and avoid those risks is part of the duty
of a financial advisor. With that being said, advisors must be
able to offer clients customized reports to put them ahead of
risks or, in the worst-case scenario, prepare them for potential
losses. WealthTech provides tools that enable advisors to
track portfolio performance and investment advisory tools to
include changes in the market to clients' data. It also offers
risk assessment tools, which help keep clients from being
blindsided by a sudden drop in market prices.
Security Risks
When it comes to handling clients' funds and financial data,
top security is needed to keep customers at ease and retain
their trust. A high level of cybersecurity is necessary for

WealthTech to function optimally, and companies must take
care to implement top-grade digital tools that possess
multiple high-security standards.
The Wealth Management

Technology Sector
Financial Technology (FinTech) refers to the broad umbrella of
software, hardware, and digital customer relationship tools
used to support or enable banking and financial services. The
WealthTech sector (wealth management technology sector)
falls under the umbrella of the broader FinTech sector and is
specifically for providing advisors and investors with the tools
to generate wealth, hence the name. It serves as a direct
alternative to traditional wealth management firms and
private banks through the use of software and innovative
technology. WealthTech covers a wide range of technologies
that give firms an edge over traditional wealth management
establishments by addressing major trends through
innovation.
Portfolio Management Tools

When investing, clients must take care not to put all their
eggs in one basket. Having a broad financial portfolio can be
crucial to increasing the probability of profit. To manage a
financial portfolio is to create and oversee a diverse set of
investments that will meet long-term financial objectives while
increasing risk tolerance. Portfolio management tools are
integral for wealth managers and companies, and integrating
WealthTech portfolio management software into their
operations has proven to be beneficial for boosting profits
and improving returns for clients.

The rise of digital investing and saving apps has also come as
a help to both investors and financial advisors who seek to
use automated tools to better their investments.
Automated Rebalancing Tools

Portfolio rebalancing involves evaluating the investment
portfolio of the client and bringing it to their desired asset
allocation mix. Automated portfolio rebalancing tools analyze
the assets of clients and suggest adjustments that go with the
desires of the investor. It is now left for the financial advisor to
analyze, modify, and green-light these changes.
A good rebalancing tool must not only be capable of client

personalization, but must also allow the financial manager to
work on the portfolio.
Compliance Tools
This software automates or facilitates the processes and
procedures that firms put in place in obedience to industry,
legal, security, and regulatory requirements. These are
compliance tools. When investing digitally, clients are more
likely to opt for user-friendly interfaces that will give them a
smooth investing experience, and wealth management firms
are increasingly turning to compliance tools for that solution.
These tools make it possible and easy for financial
management firms to audit user activity, streamline risk
management and implement other required controls.

WHAT DOES WEALTHTECH
MEAN FOR THE FINANCIAL
SERVICES INDUSTRY?
WealthTech tools, innovations, and companies' assets in the

business growth of financial advisors and wealth
management firms WealthTech offers solutions caused by
problems of the human condition and gives strength to the
areas of financial management where traditional models fail.
WealthTech improves efficiency, cuts costs, provides reliable

data, and keeps advisors in the know through automated
intelligence insight programs. All these tools assist in
retaining existing and bringing on new clients, which is crucial
for the success of a financial service company. Even areas
that traditional financial models usually ignored, such as
social media, are now being utilized for the sake of the
industry, and this falls under the WealthTech umbrella.
WealthTech keeps the financial services industry competitive,

and a competitive environment is a boon for customers, as
firms will keep looking for better ways to outdo the
competition by satisfying customers. This keeps the financial
services industry from being stagnant and lazy. To thrive,
companies will strive for efficiency and customer
personalization for their growth.
Also, WealthTech has made it so that financial advice is no

longer secluded to high-net-worth (HNW) clients. WealthTech

startups attract customers with low fees and convenient,
mobile platforms, reaching wider than the traditional model of
financial services that stuck to those with deep pockets.
The API integrations of WealthTech innovations streamline

back-end, mundane processes. For the financial services
industry, this entails firms becoming more efficient, offering a
better customer experience, and growing rapidly as they
would have more space to broaden their market and grow
their brand.

WHY WEALTHTECH IS
IMPORTANT FOR
ADVISORS AND WEALTH
MANAGEMENT FIRMS?
Financial advisors and wealth management firms today are

inundated with promising technology solutions that
streamline client data, optimize portfolios, improve marketing
effectiveness, and provide seamless back-end processes. But
advisors and leaders of growing wealth management firms
and financial institutions are often confused about where to
get started.
WealthTech tools give wealth managers a leg up on the

competition when they select the best applications for their
practice. New software solutions and online services brought
about by WealthTech innovations can reduce costs and free
up time for advisors to focus on diligent and customized
planning.
Streamlining back-end operational tasks also allows for more

face time with clients. Still, advisor adoption of WealthTech
products has room to grow. According to a recent Kitces
study (PDF), while some software categories like CRM
systems and wealth planning software have high adoption
rates, there are still many manual functions performed in
spots such as lead generation, student loan management,
overall plan monitoring, and estate planning. Financial

advisors clearly need a boost to bolster their fintech use.
Traditional wealth management involves wealth managers

who offer a wide range of financial services like investment
advice and general financial planning. All of the information is
based on the advisors’ expertise and experience. With
technology entering the arena, companies and individuals
can manage their investments and assets at a speed and
efficiency that goes beyond what traditional wealth
management practices offer. One of the reasons for this is the
misconception — and even the fear — that WealthTech tools
can replace financial advisors.
However, even though WealthTech uses specialized software

and algorithms to streamline wealth management, nothing
can replace human interpersonal relationships. The
automated processes help advisors focus more on enhancing
client relationships. In a nutshell, WealthTech enhances what
wealth managers can accomplish, and understanding this is
one of the first steps in mastering the technology while
leaving room for human equations.

HOW WEALTHTECH
PLATFORMS SOLVE THE
FINANCIAL LITERACY GAP
FACED BY FIRST-TIME
INVESTORS?
Traditional financial management models focused on

high-income and high-net-worth investors and more or less
ignored first-time low-income investors. Today, the
amalgamation of technology and human advisors has brought
in a slew of new investors. Although these first-time investors
are often technologically literate, working through the
financial market is a complex process that can lead to ruin if
not treaded with experience.
This is where WealthTech comes in, as digital platforms come

with friendly user interfaces and professional advice. These
tools educate first-time investors, give them the necessary
advice, and encourage them to look at the data and invest.
WealthTechs Bridging the Gap

WealthTech platforms are not only run by engineers and
software developers; those individuals partner with financial
advisory firms. Financial advisors are available to educate

first-time investors on the importance of financial planning,
asset allocation, and portfolio rebalancing. Online and
personal interactive sessions with professionals are often
offered, as well as investor awareness programs. All these
are set in place to walk first-time investors through terrain
that may otherwise be difficult for them to tread alone.
It is important to note that first-time investors are not

accustomed to volatile market conditions and other
investment risks. They are often driven by emotion or gut
feelings and not facts, leading them to make
emotional-quotient (EQ)-backed investments and lose their
hard-earned money when capital markets are in a bull run.
First-time investors often invest in companies with weak
financials out of a need to make money.
WealthTech programs are put in place to bridge that gap

between newbies and professionals. The investors’ financial
goals are discussed, and advisors present investment
avenues that best suit the client's risk-return profile.
Transparency is important in the financial sector, and first-time
investors are made aware of the risks and tax implications of
the underlying investments. Through these, WealthTech
builds clients' trust and bridges the gap between investors
and capital markets.
Asset Allocation and Portfolio

Rebalancing
Financial investments are strongly based on research and
advice. As it is best to not go all in on one market, it is also
wise to research viable investment options. Investments need
to be diversified between various asset classes like debt,
international equity, and gold.

Asset allocation is the process of researching and deciding
where to invest through the implementation of an investment
strategy that attempts to balance risk versus reward by
adjusting the percentage of each asset in an investment
portfolio according to the investor's risk tolerance, goals, and
investment time frame. The keyword here is "portfolio", as
portfolio rebalancing is necessary for asset allocation.
WealthTech provides an array of accurate data, and financial

advisors come with the skills to dissect this information for
clients. This hybrid model helps investors understand
in-depth economic scenarios and keeps them from making
emotional-quotient-backed investments.
Asset allocation and portfolio rebalancing help lessen risks,

realign weights in outperforming assets, and invest in
underperforming asset classes that have the potential to
generate higher returns.
WealthTech offers innovative software and tools that help

diversify investment portfolios and personalize customer
experience so that clients achieve their financial goals based
on their risk and return profiles.

CASE STUDIES OF
WEALTHTECH BUSINESS
Here, we will be diving into an in-depth case study of

prominent WealthTech businesses.
Scalable Capital Business

Model
Scalable Capital is a digital asset management service that
enables access to the capital market through smart
technologies, ease of use, and low costs.
The Scalable Capital business model is focused on using its

large selection of investment strategies to offer a simple and
cost-effective option for its users who don't want to handle
their own investments. It is also a platform for investors to
trade stocks, ETFs, funds, cryptocurrencies, and derivatives
independently.
When required, the company constructs and administers

globally diversified ETF portfolios for its clients in the digital
wealth management sector, along with sustainable
investment techniques.
Who is Scalable Capital?

Scalable Capital is an online trading and investment platform
that is focused on bringing investment opportunities to

individuals who may not be ready to start active trading. It
was founded in 2015 in Munich, Germany, and has become
one of Europe's fastest-growing digital wealth managers.
As one of the leading asset managers in Europe that is

beginning to gain a foothold in the UK market, it offers a
regular broker account without trading fees and an optional
savings deposit account. The company creates a systematic
and automated process called robo-advisors.
Robo-advisors provide professional asset management and

protect users from making suboptimal investment decisions.
The automation process has several other benefits for
investors. They include increased efficiency, improved user
interaction, reduced fees, and transparency.
How does Scalable Capital Work?

The company uses a proprietary risk management
technology system, which helps it keep costs fairly low by
focusing on exchange-traded funds (ETFs) as investments.
Scalable Capital has a minimum investment amount of
£10.000 and invests your money in
a portfolio of ETFs across a wide range of assets.
As a robo-advisor based on technology, all its services are

carried out online. Interested clients use their email
addresses to register and begin the process of obtaining a
proposed investment portfolio. It allows its clients to see the
proposed portfolio without having to provide more than their
email addresses.
Scalable capital has an easy-to-use and straightforward

interface. The first step to opening an account is to sign up
and verify your email ID. After that, it will use external or
propriety risk questions to access your attitude toward risk.
There is an obligatory risk-based multiple-choice question

and a series of questions that focus on the client's personal
circumstances. It is basically a simplified version of a fact-find.
They can ask you a series of hard facts questions like how
much you earn, or soft facts questions like what your
objectives are. They do this in order to make a suitable and
recommendable proposal portfolio.
Once you’re done with the questions, you will be presented

with a proposed Scalable Capital portfolio.
During the sign-up process, you will be asked about the

amount of loss that you're willing to go through. This is done
to gauge your risk tolerance. People must be open-minded
about the reality of trading and investment. Just like one can
make money, one can also lose money. This is why you
mustn't solely concentrate on the amount you could earn, but
also take into account the amount you could lose.
The point is that investing is not for everyone, and if the

market crashes, you need to be comfortable that your
portfolio could fall in value.
What Products Does Scalable Capital Offer?

Scalable Capital creates a window for its users to invest with
a Stocks and Shares Individual Savings Account (ISA), a
Self-invested Personal Pension (SIPP), or through a General
Investment Account:
Scalable Capital Individual Savings Account

Scalable Capital Stocks & Shares ISA is a tax-free saving or
investment account that allows you to put your ISA allowance
to work and maximize the potential returns you make on your
money. It allows investment in a tailor-made ETF portfolio
where your capital is shielded from income tax, tax on
dividends, and capital gains tax, hence encouraging tax-free

growth.
Scalable General Investment Account

This works in the same manner as its individual savings
account, but without tax-free benefits.
Scalable Capital SIPP

Its Self-invested Personal Pension service is invested and
managed by Scalable Capital as an investment partner of AJ
Bell Investcentre. Deposits are subject to both the annual
SIPP limit (€40,000 for the tax year 2019/20) and the lifetime
allowance (currently £1.03 million).
Through this SIPP individuals can make their own investment

decisions from the full range of investments offered by
Scalable Capital.
What is Scalable Capital's Investment Strategy?

Scalable Capital uses a technology-based risk management
investment strategy to improve risk-adjusted returns. It
focuses on qualitative factors like human investment
committees and in-house quantitative processes.
Scalable Capital provides a passive investment approach

based on exchange-traded funds (ETFs) that invest in a
variety of asset types. It adjusts its portfolios if the risk model
algorithm predicts an increase in downside risk.
They make use of VaR (value at risk) which is an underused

statistical measure that attempts to quantify the worst-case
scenario. VaR is a statistical measure of the likely fall in the
value of a portfolio over a period of time. It predicts 23
different risk categories, each with an in-depth analysis of
possible loss outcomes in a given year. This creates an
insight for clients which allows them to effectively choose one

based on the maximum portfolio loss they are ready to
accept.
Client portfolios are then built by combining ETFs

representing various asset classes and geographies to
maximize returns while keeping risk levels that the client is
comfortable with.
On its website, Scalable Capital provides the most detailed

explanation of its investment procedure. It explains how it
employs 'Dynamic Risk Management' to keep a portfolio's risk
level constant in order to maximize returns in both rising and
falling markets. Furthermore, it demonstrates how a portfolio
asset mix would have altered in the 19 years following the
dot-com bubble, which makes for fascinating reading.
How does Scalable Capital Manage its Portfolios?

The risk management model at Scalable Capital is run on a
weekly basis. This model forecasts weekly loss potential and
detects if there will be a higher loss potential than the client
has set. If a higher loss potential is predicted, an adjustment
would be made to their portfolio that day.
Scalable Capital prioritizes portfolio management centered

on evidence-based historical data risk analysis over
forecasting future market movements. It focuses on risk so
that the client may potentially avoid periods of bad
performance for a given asset while maximizing the returns
on the risks you take.
They also show a graphical representation of how the

projected portfolio's asset mix and asset allocation have
changed over time. Clients may also use a sliding bar to
lower their VaR and observe how this affects the portfolio
composition.

Scalable Capital Performance
When compared to its competitors, it is clear that Scalable
Capital is unlikely to be the top performer. This is solely
attributed to its strong focus on risk management. Moneyfarm
provides the strongest and most consistent returns in the low
to medium risk range from 2017 statistics. Of course, this is a
limited data range, but it highlights the difference in
approach.
Although the performance of its low-risk portfolio has been

exceedingly dismal, it was noted that investors who value risk
management over returns may accept that Scalable Capital
produced far better results with their higher-risk portfolios in
what was an extremely volatile year for markets.
What are Scalable Capital Fees?

Scalable Capital charges a fee of 0.75% per year on the total
amount invested, deducted monthly from investments. In
addition, an ETF charge of 0.16% per year is levied. This
places it at the robo-advisor market's mid-price level.
Scalable Capital does not have a hierarchical charging

structure, which means that it does not become cheaper as
you hold more assets with it. Its competitors, Nutmeg and
Moneyfarm, charge a fee of 0.75% per year for their fully
managed services. However, this reduces to 0.35% for any
assets over £100,000, making Nutmeg and Moneyfarm less
expensive.
Furthermore, Scalable Capital requires a minimum

commitment of £10,000 to start an account, in comparison to
£500 with Nutmeg or £5,000 with Moneyfarm.

InvestSuite Business Model
InvestSuite's business model is focused on offering
WealthTech as a service to banks, brokers, wealth managers,
and other financial institutions.
It is a Belgian-based B2B WealthTech startup that aims to help

financial institutions accelerate their digital wealth
transformation by using its AI-based digital investment
solutions. It provides cloud-native, modular WealthTech and
InvestTech solutions to financial institutions worldwide.
InvestSuite delivers an end-to-end, configurable robo-advisor.

Its robo-advisor is centered around the iVaR-based portfolio
construction framework. This iVaR framework provides an
automated digital investment product that financial
institutions can offer to their clients.
How InvestSuite work

InvestSSite allows for seamless integration of its WealthTech
solutions into an existing ICT infrastructure, optimizing
marketing speed at much lower investment and operating
expenses.
Their solutions are strategic and built with the flexibility to be

modified as a company expands. By collaborating with core
banking platform suppliers, management consultants, project
managers/consultants, and others, they can function across
various geographical regions.
Their strategy occurs in three phases.
Intake
The Heads of Digital/ICT and/or Innovation/Strategy and top
business stakeholders are often the first to participate in the

initial, non-binding intake conversations. If the client is
interested and wants to proceed, one to three workshops are
held. The goal of these workshops is for them to learn more
about their clients' specific needs and the solutions they can
provide to resolve them. There are no expenses for the client
at this time.
Design
Once the client's objectives have been stated and fully
understood, the next step is the design process. This step
might not require a lot of time to complete, but depending on
the size of the project, it can take anything from an instant to
three months. The result is usually a target operating model,
a target architecture model, the needed parameterization,
and an implementation roadmap, as well as a concrete price
and service proposal.
Set up and implementation

After the design plan has been completed, the next step is
execution. This can take as little as a few days (in the case of
our Portfolio Optimizer solution) or as long as nine months,
depending on the required ICT setup.
The implementation of the design plans can be accomplished

quickly with a standardized solution. But the rate of execution
also depends on the size of the client. However, there's also
the option of engaging in co-creation and expanding beyond
an "off-the-shelf" approach. This allows for unique
differentiation while still utilizing existing building blocks to
progress quickly.
As a result of InvestSuite’s business strategy, they can

operate in multiple geographical locations and combine the
expertise and speed of smaller organizations with the proven
capabilities of larger players and implementers. They achieve

this by partnering with management consultants, the client’s
project managers and/or consultants, as well as core banking
platform providers.
Personal Capital Business

Model
The foundation of Personal Capital's business model is
centered on charging advisory fees to clients in exchange for
managing their finances. The fees for an investment portfolio
are determined by the weight of the portfolio and the client's
status as a private or institutional client.
Personal Capital is a digital asset management platform that

provides tools and solutions for net worth management,
investment optimization, and retirement planning. The
company has a tiered compensation structure, with fees
decreasing as a user commits more to Personal Capital.
They offer users free access to their financial software. This

has granted them the opportunity to actively seek individuals
who have invested more than $100,000 and convert them
into full-fledged clients.
Their business strategy which involves investing in

establishing an award-winning app, delivering amazing value
to the user, and assessing whether some consumers want
their money professionally managed has so far proven to be
a fairly reasonable approach.

What is Personal Capital?
Personal Capital is an online financial consulting and asset
management service launched in 2009 by Bill Harris, Louie
Gasparini, Rob Foregger, and Paul Bergholm to streamline
and make wealth management more transparent. It
accomplishes this by providing a range of financial
management tools that assist in enhancing and improving
personal finance management.
The company offers on-site financial advice to account

holders holding balances of over $100,000. This basically
means that account holders with over $100,000 in assets are
eligible to receive advice from one of the company's certified
financial advisors.
As previously stated, Personal Capital generates revenue by

charging clients consulting fees in exchange for managing
their assets.
A Short History Of Personal Capital

Bill Harris, Louie Gasparini, Rob Foregger, and Paul Bergholm
launched the company in 2009. Bill Harris was a finance
executive at PayPal who supervised the merger that made

PayPal what it is today. After a year at PayPal, and garnering
over a million users for the platform, Harris began his next
venture, which was Personal Capital.
He observed that the available money management methods

at the time were, at best, mediocre. Customers who
possessed checking accounts, credit cards, loans,
mortgages, or retirement accounts had to access each of
these services separately. Aside from being inconvenient, the
lack of expedited access also resulted in a lack of
transparency attributed to hidden fees.
Personal Capital was then created, with Harris and his

co-founders contributing $2 million. The team then spent two
years improving the product before introducing it to
tremendous success in 2011.
Personal Capital, unlike its primary competitors, Betterment,

Mint, and Wealthfront, clearly positioned itself as a hybrid
advisor, employing both algorithms and human experience.
The business even established a satellite office in 2013,
where its financial advisors are currently working from.
They did not target a diverse range of households but instead

focused on the wealthy, i.e., those with more than $100,000
in assets. This enabled them to create tools that were
specifically tailored to the needs of this user base.
Because of the high quality of its products, the company

received a lot of positive word of mouth, which became one
of its key growth routes.
And when it comes to tools, Personal Capital's solutions,

which include its savings or retirement planner, are available
to everybody. Users only pay when the firm's financial
analysts encourage them to. Nonetheless, it was its free tools
that drove sign-ups for the company's commercial services. In

fact, more than 90% of the company's paying customers
came from its free tools.
In 2020, the company was bought for $1 billion by a Canadian

firm called Empower Retirement. Through Empower, the
company now provides services to 12 million customers with
over $1 trillion in assets.
How Does Personal Capital Work?

Personal Capital offers resources and strategies for
enhancing financial control. The service allows clients who
register for its services to connect their financial accounts to
obtain a detailed analysis of their assets and liabilities. These
accounts can range from 401ks, IRAs, mortgages, loans, and
credit cards, to checking accounts, and lots more.
After the registration process, clients with assets of $100,000

or more are eligible to be connected with a financial advisor
who will examine their current investment practices, net
worth, spending patterns, and overall financial goals.
Based on the user's requirements and preferences, the

advisor will develop a tailored strategy that can be utilized to
achieve these objectives. In addition to their own knowledge,
advisors would implement other algorithmic suggestions that
would either improve or complement theirs.
Individuals can also self-manage their funds through Personal

Capital's other financial tools. Through these tools, the user
will be able to track their net worth, save and budget, assess
their financial flow, and view investment checks.
Clients that have more than $100,000 in assets, can enjoy the
benefits of premium add-on services that will be provided by
the company. Some of these premium features include tax
management for efficiency, access to private equity,
weighting for intelligent results, municipal bond inclusion, and

data-driven portfolio creation.
Personal Capital offers its environmentally conscious users a

socially responsible investment portfolio. This strategy takes
into consideration important factors like climate change,
renewable energy, diversity, labor relations, and board
independence.
They also allow customers to access an extensive library of

financial education content. Personal Capital can be
accessed via the company's website as well as its mobile
phone and tablet apps (available on Android and iOS).
How Does Personal Capital Make Money?

Personal Capital makes money from the fees it charges for its
financial advisory
services. These services are open to account holders with
over $100,000 in assets and apply a tiered commission
structure to their private clients.
In exchange for these fees, users will receive advice from

financial experts on topics such as investing, portfolio
management, custody, or trading. Users that invest more than
$200,000, are eligible to receive tips from two certified
financial advisors.
Its tools remain free for everyone who signs up for the
platform. The company utilizes a freemium model, which
essentially sucks users into their tools but requires advisors
to fully optimize financial returns. Wealthier clients, who often
do not necessarily have the time to deal with their finances,
are the ones seeking such financial advice.
In terms of pricing structure, Personal Capital charges an

annual all-inclusive management fee and there are no hidden
costs, trailing fees, or trade commissions. This conforms to
the company ethos set by former CEO Bill Harris.

However, when compared to its competitors like Vanguard's
Personal Advisor Service, which charges 0.30%, and
Betterment, which charges 0.40%, its fee structure is
positioned on the higher end of the market. Personal Capital
believes its fee structure is justified given the extensive
number of services the company provides, as well as the
ability to access 2 accredited advisors.
Personal Capital offers three alternatives to its users that are

loosely structured around:
Investment services | $100,000 to $200,000

Here, users get access to tools for financial planning, a team
of advisors, retirement planning, portfolio monitoring, and
rebalancing, as well as EFTs.
Wealth management | $200,000 to $1 million

Bonuses such as a tailored portfolio of individual stocks and
tax optimization are available with this option. In addition,
there are two specialized advisors available who offer advice
on stock options, remuneration, home finance, insurance, and
other topics.
Private client | $1 million plus

This premium service includes access to specialists, wealth
planning, and an evaluation of private equity and hedge
funds. It also includes the conversion of capital into bonds
and private equity investments.
What is the Funding and Valuation of Personal Capital?

According to reports made by Crunchbase, Personal Capital
has successfully raised $265.3 million through nine rounds of
venture capital funding. Its main investors include Silicon

Valley Bank, IGM Financial, Crosslink Capital, IVP, and others.
Personal Capital was acquired by Empower Retirement for $1

billion. Empower Retirement is a firm that offers retirement
services to other companies.
Returns like this indicate a broader trend in the FinTech

sector, which has witnessed multiple successful sales in
recent months. A good example would be Intuit, which
recently purchased Credit Karma for $7.1 billion and Plaid for
$5.3 billion.
What is the Revenue of Personal Capital?

Personal Capital reported $1 billion in sales for the fiscal year
2019. However, it was not stated whether the corporation
made a profit from it.
Success Story of Personal Capital

It all started in 2009 when Bill Harris, Louie Gasparini, Rob
Foregger, and Paul Bergholm founded Personal Capital and
set up its headquarters in Redwood Shores, California.
Bill Harris, the founder of Personal Capital, had worked in a

variety of executive positions in the financial industry in the
past. From ChipSoft, which was released in the early 1990s,
was used to prepare taxes and later merged with Intuit. He
went to PayPal, where he worked for a year and generated
over a million members.
After working for PayPal, Harris started several startups in the

financial technology and cybersecurity fields.
He started PassMark, a company that developed an online

authentication system with
multiple functions designed for banks and brokers, but was
later sold to RSA Security.

After he exited this company, Harris had a lot of time to
contemplate his future ventures, which is when he realized
that with all the expenses he was about to incur, there was no
financial management tool effective enough to keep things in
check.
And he noticed that he was not the only one who faced such
difficulties. There were many clients, particularly from wealthy
families, that suffered from the complexity of navigating the
financial landscape of checks, loans, credit cards, and
mortgages.
There was a lot of complexity in its finances because each

account had to be accessed separately, and a lack of
transparency because some credit cards and investment
funds included hidden fees that were not always obvious to
users.
To tackle his problem and one that many American families

were facing at the time, Harris founded Personal Capital in
2009. His co-founders were former acquaintances from other
businesses he had created and sold.
The firm was founded with a $2 million investment from the

founding team. And thanks to the lack of outside funding, the
creators were able to construct the product without feeling
pressured while researching the needs of their target market.
In August 2011, personal capital emerged from the shadows.

The product was released to the public some months after
the company built it. The IT company had previously obtained
$10 million in series A and B funding led by IVP.
The startup was able to attract users right away. The primary
reason for this was that its founders had spent the previous
two years refining the core value proposition and target
demographic.

While personal capital expanded in the years that followed,
the company's employees thrived without Harris, who
founded the entire operation. Harris chose to step down as
CEO after eight years of service to focus on other
entrepreneurial endeavors.
His position was filled by Jay Shah, who initially joined

Personal Capital in 2009 when it was only just starting out
and later progressed to the position of COO. Personal capital
has grown to 2.5 million users and manages assets of more
than $14 billion under Shah's leadership.
Personal Capital's bundled offerings may now be accessed

by about 10 million customers who may now access Personal
Capital's ER plan.
Personal Capital will keep a distinct brand that will not be

merged with its goods into the current ER services
eToro Business Model

eToro is a FinTech company that allows users to trade various
financial assets, including stocks, cryptocurrencies,
commodities, and many more. With the CopyTrader feature,
eToro allows users to mimic traders.
eToro’s business model focuses on making money via the

spread. It charges a number of fees to its users, including
currency conversion fees, inactivity fees, withdrawal fees, and
overnight and weekend fees on open CFD positions.
Founded in 2007, eToro has grown to become one of the

largest online brokerages in the world. More than 20 million
users are now registered on the platform, which is expected
to go public in late 2021.

What is eToro?
eToro is a leading online brokerage that provides
cryptocurrency trading and stock trading services to its users.
It allows them to buy and sell various financial assets ranging
from stocks, commodities, currencies, cryptocurrencies, EFTs,
and even indices in a process that eToro refers to as "manual
trading".
Through eToro, users can also buy and sell a CFD (contract
for difference), which is a contractual agreement between a
trader and a broker to exchange the value of a financial asset
(such as a commodity) between the contract's opening and
closing times. In this case, the trader would sign an
agreement with eToro to replicate market conditions without
purchasing the underlying assets.
eToro also offers social trading, in which users can follow

other traders and mimic their trading strategies.
A short History of eToro

eToro is an Israel-based financial services company that
specializes in social trading, multi-asset brokerage, online
investing, and Bitcoin exchange.

Yoni and Ronen Assia, together with David Ring, founded the
company in 2007. Yoni, who studied computer science,
recognized that existing trading platforms were difficult and
costly to use. As a result, they became inaccessible to the
average consumer.
With Ronen's background in product management and

software engineering, the trio was able to secure $1.7 million
in private funding to develop eToro. The platform was
released late in 2007 with the sole purpose of simplifying
forex trading.
In 2013, after allowing traders to publish and share the details

of their trades with others, the company experienced rapid
growth. The following year, eToro became one of the first
cryptocurrency trading platforms.
How Does eToro Work?

On eToro, there are two ways to trade stocks. Buying and
selling stocks outright (trading real shares) or trading stock
price movements through CFDs. You can trade in both
directions with CFDs and use leverage to increase your
exposure.
Even for beginners, the eToro platform is simple to use. It has

unique features such as social trading which allows users to
follow other traders and mimic their trading strategies. eToro
also allows its users to trade a variety of cryptos. It is praised
for its social trading features, cryptocurrency offerings, and
zero-commission stock trading.
The Popular Investor program feature it offers is an initiative

that promotes the best and most responsible traders on the
platform. It charges a commission based on the trader's
assets under management (AUM) as well as their profits.

eToro also offers a variety of educational resources in the
form of blogs and videos to assist its users in navigating the
financial markets and financial assets in which they trade.
Users can gain access to eToro's platform via its website or by

downloading one of its mobile applications, which are
available for both Android and iOS devices.
How Does eToro Make Money?

eToro earns money from trade spreads, overnight and
weekend fees, withdrawal fees, currency conversion fees,
and inactivity fees.
Spread
A spread is the difference between the selling and buying
price of any specific financial asset that a user trades.
Spreads are applied anytime a user buys or sells an asset.
For instance, if the bid is 1.3727 and the buy price is 1.3729,
the spread is the difference: 2 percentage points. The
difference is where eToro makes money. Spreads are
charged whenever you trade any type of financial asset on
eToro, including stocks, currencies, commodities, and
cryptocurrencies.
As a result, eToro is enticed to maximize a user's trading

volume. As a result, features like CopyTrader encourage
users to make more trades.
It should be noted that eToro makes money even when its

users lose money. A trader can buy a CFD speculating that
the price of Apple shares will fall. If the price rises, the trader
will have to pay the difference in price between when he
opened and closed his or her position (hence the name
"contract for difference).

Withdrawal & Conversion Fee
A withdrawal fee is applied whenever a user withdraws
money from their account. This fee is used to cover the cost
of international money transfers. A $5 withdrawal fee is
applied after users have withdrawn a minimum of $30.
Additionally, a conversion fee is charged each time a user

requests a withdrawal in a currency other than the U.S. dollar.
And these conversion fees are expressed in percentage
points (PIP), which is the arithmetic difference between two
percentages and varies according to the currency they are
exchanged in.
Depending on their tier, eToro Club members can either

receive discounts when converting or are completely exempt
from paying conversion fees.
Overnight and Weekend Fees

eToro, like many other CFD trading platforms, charges fees
for overnight and weekend trading (also referred to as swap
rates or rollover costs).
This fee is a quasi-interest payment in exchange for the

money eToro lends to the user to hold assets overnight or
over the weekend. And it is determined by a number of
factors, including:
● The kind of financial asset being traded;
● The nature of the position held (BUY vs. SELL);
● The total volume of trades. Rollover fees can fluctuate

depending on global market conditions.
In addition to its overnight and weekend fees, eToro uses the

London Interbank Offered Rate (or LIBOR). LIBOR is the

interest rate that banks charge each other to borrow funds
overnight or over the weekend.
Inactivity Fee
eToro charges an inactivity fee to users who have not logged
into their account in the previous 12 months.
The fee is $10 per month (fees may vary in other countries)
and is charged on the remaining available balance.
eToro, however, does not close any of the user's open

positions in order to cover the charge.
Success Story of eToro

Yoni (CEO) and Ronen (Chairman) Assia and David Ring
founded eToro in Limassol, Cyprus, in 2007. The Yoni brothers
had always been fascinated by the trading and investing
worlds. Yoni had even learned how to trade stocks from his
father at the early age of 13, and later on, became intrigued
by the tech world as well.
After completing his computer science studies in Israel and

his obligatory army service, Yoni founded his first business in
2003 called CRide. CRide developed a hardware system for
recording roller coaster riders, which was purchased after
being transmitted wirelessly. The business was a huge hit,
and his team earned a lot of money from it.
However, the potential size of the CDRide business was

somewhat limited. Yoni's aptitude for trading financial assets
prompted him to start a new enterprise in the financial sector.
At the time, there were very few trading platforms. Although
these platforms were easy to navigate, they charged
exorbitant fees and were inaccessible to most people.
With his brother Ronen (an expert in product management)

and David Ring (over 20 years of experience in software
engineering), Yoni set out to change this.
eToro went public in late 2007 with a $1.7 million initial capital
and months of hard work. eToro's sole focus was initially forex
trading, specifically the U.S. Dollar, British Pound, Australian
Dollar, Euro, and Japanese Yen.
The team prioritized simplifying the forex trading process and

gamification. They offered a variety of games, like Dollar
Trend, a game in which users raced the dollar against other
currencies, and Forex Match. However, the gamification
features did not result in long-term engagement.
As a result, eToro shifted its focus to providing traders with

everything they needed to make trading easier. Commodities
trading was added to eToro in 2009 as part of a $6.3 million
Series B round. A year later, eToro launched the OpenBook
platform, propelling the company to new heights. Users could
publish and share their real-world trades on the platform.
These trades could then be replicated by other traders.
This feature was named CopyTrader. The following year,

eToro added the ability to trade company stocks, attracting
even more (copy) traders. Another significant milestone was
reached by the company in January 2014, when it began
trading in Bitcoins. Since the 2017 Bitcoin craze, the
company's user base has grown from six to nine million.
Previously, CFDs were the only investment option available to

users in certain countries. But now these users can now own
the assets they purchase (stocks or cryptocurrencies).
What is the Funding & Valuation of eToro?

According to Crunchbase, eToro has raised a total of $272.7
million in venture capital funding over 12 rounds.

Its investors include Spark Capital, CommerzVentures,
Softbank, Fidelity, China Minsheng Financial Holdings, and
Korea Investment Partners, among others.
And just like we previously stated, eToro is expected to list on

the NASDAQ through a SPAC merger. The newly formed
company will be valued at $10.4 billion.
What is the Revenue of eToro?

eToro reported annual revenues of $650 million in 2020, a
147% increase over the previous year. In 2021, eToro
generated $1.2 billion in revenue, a 103% increase over the
previous year. This is the second year in a row that revenue
has increased by more than 100%.
Betterment Business Model

Betterment is a financial services company that provides
investment, retirement, and cash management products to
both individuals and businesses.
The Betterment business model revolves around generating

revenue through its Digital and Premium plans, as well as
through partner bank compensation, fees on debit card
transactions, referral fees by promoting insurance packages,
and Betterment for Business and Betterment for Advisors.
Betterment Business Model is based on a portfolio

optimization program
that optimizes your portfolio based on your age and risk
tylerance. In
addition, Betterment makes investing as easy as possible by
keeping it to a
few minutes each month.

What is Betterment?
Betterment is a financial advisory firm based in the United
States that provides robo-investing and cash management
services to retail investors. It is ideal for individuals who want
to increase their wealth without spending a lot of time
managing it.
Betterment is a good option for investors looking for

long-term returns that outperform the market. The company
has built numerous optimizations into its platform that allow it
to outperform traditional investment managers. Betterment's
robot-advisor is one of the most cost-effective options on the
market.
Betterment's revenue model includes reimbursement from

partner banks for its Digital and Premium plans, debit card
transaction fees, referral fees generated from insurance
package promotions, and Betterment for Business and
Betterment for Advisors products.
How Does Betterment Work?

Betterment is a fintech startup that offers online financial
advice in the U.S. It also offers investment and cash

management products to retail customers. Betterment
provides four main services:
● 401(k)s
● IRAs
● Invest accounts
● Spend and Save accounts
Betterment’s Spend account equips users with a checking

account and debit card to help monitor their spending.
One of Betterment’s USPs is its no-fee, high-yield cash

accounts. These help customers earn a profit and maximize
their savings.
Betterment’s customers enjoy an array of financial

management benefits. They enjoy up to $1 million in FDIC
benefits, seamless transfers, joint accounts, and an annual
percentage yield of 0.40%.
Betterment’s retirement plans are IRAs and 401(k)s, and they

provide customized retirement plans for customers. Some
other features that Betterment offers are:
● A customized savings plan based on user preferences;
● Tax-saving features that help maximize returns;
● Betterment helps invest on behalf of users with its

investment account. They optimize the investment
portfolio and tailor it to the customers’ financial needs.
How Does Betterment Make Money?

One of the ways that Betterment makes money is through an
annual asset management charge.
For instance, let’s imagine they handled $10 billion in assets.

If their users paid 0.20% annually, Betterment would earn $20
million in asset management charges.
Additionally, most Betterment users subscribe to their
Premium plan. The Premium plan charges 0.40%, meaning
that Betterment earns far more than our earlier calculated
$20 million annually.
Essentially, the ways that Betterment makes money are:
● Advice Packages
● Digital and Premium plans
● Betterment for Advisors
● Betterment for Business
● Checking account
● Cash reserve
● Visa transaction fee
Advice Packages
While Betterment strives to make finance simple, it frequently
falls short. To account for this complexity, the company
established the Betterment Advisor Network.
It is made up of accredited financial advisors with decades of

industry experience. Betterment provides a variety of
consultation packages to access that knowledge and advice.
These include tips on how to get started with Betterment,

auditing a client's financial situation and investment portfolio,
and teaching clients how to effectively budget and save for
life-changing events like marriage or college.
Clients pay a one-time fee that ranges from $99 to $299 for a
one-hour consultation. The majority of Betterment's network
advisors are not directly employed by the company. As a

result, it is logical to assume that revenue from the packages
is shared with its advisors.
Digital & Premium Plans

Betterment handles customer money with two investment
programs: Digital and Premium. Their business strategy is
developed with a combination of computers and human
judgment.
Basically, each user pays an annual fee that directly depends
on the amount in their
Betterment For Advisors

Betterment works with accredited financial advisors, who in
turn work with a portion of the customers.
Betterment offers a SaaS application to help build the
relationship between them and their financial advisors.
Hence, the birth of Betterment for Advisors. It allows the user
to:
● Harvest tax losses;
● Locate assets;
● Rebalance accounts at any time;
● Deposit or withdraw money at any time.
Betterment for Advisors is specially designed to manage

client wealth. When it comes to fees, Betterment charges
$150 and a tiered fee that ranges from 0.12-20%. However,
the exact fee will depend on the total assets of the advisor.
Betterment For Business

Betterment for Businesses is a specially designed 401(k) plan
for businesses and their employees. Betterment also features
consumer programs that teach users how to set up a 401(k)

account and which investment options to choose.
Clients who utilize this feature have access to the payroll of
various tool providers such as Rippling, Ceridian, and
Workday.
For Betterment for Business 401k plans, the costs depend on

the number of employees, amount of money invested, add-on
features, and payroll provider.
Checking Account
Betterment offers customers a standard checking account
and debit card, plus a high-yield cash reserve account.
In Betterment’s checking account, there are no monthly dues,
maintenance fees, or withdrawal fees. Hence, Betterment
pays all ATM fees worldwide, including foreign transaction
fees, purchase, and ATM fees.
Note, however, that Betterment’s accounts aren’t wholly free
of charge. Whenever a debit card is used to make a
purchase, Visa charges a fee to the retailer. This fee is
referred to as a Visa transaction fee.
Cash Reserve
Betterment's Cash Reserve offers no-fee, high-yield cash
accounts to users. Account holders can currently earn an
Annual Percentage Yield of 0.40%, which is eight times the
national average. Betterment makes money by charging
banks to invest the money of its clients in other assets.
Among the partners are Citi, Barclays, Valley National Bank,

Seaside National Bank, Trust, and Georgia Banking Company.
Bank account holders do not need to be concerned about
their funds being wasted. Betterment is FDIC-insured up to S1
million.

Cellphone Insurance
Betterment announced in September 2020 that it would
collaborate with Sure to provide cellphone insurance
protection to all of its members.
The insurance provides coverage for both damage and theft.

Customers will receive up to $600 per claim, with a maximum
of two claims per year.
The insurance is available through Betterment's checking

account. Betterment will profit from referral fees collected for
each insurance policy booked through its platform.
Success Story of Betterment

As a result of frustration with online money management, Jon
Stein, a Harvard graduate, envisioned a business idea that
later became Betterment.
His former roommate Sean Owen, also a Harvard graduate,

helped jump-start the idea actualization. During the creation
of the first version of Betterment, Stein handled the front end
while Owen handled the back end.
Due to the complex legal environments surrounding financial

products, Stein needed someone with experience in the
financial field. He later met an old acquaintance, Eli
Broverman. Broverman helped register Betterment with the
securities and exchange commission.
This was not enough, as they needed to become licensed

broker-dealers. With the help of serial entrepreneur, Ryan
O’Sullivan, Betterment LLC was allowed to incorporate in
August 2008.
On May 2006, 2010 Betterment was introduced to the public

at TechCrunch Disrupt’s first-ever conference. In the same

year, they launched an iPhone app, managed millions of
assets, and gained thousands of customers.
With steady growth, Betterment currently serves over

500,000 customers with balances of $44,000. Betterment
now manages $22 billion in assets management, employs
approximately 500 people, and is America’s largest robotic
advisor.
What is the Funding and Valuation of Betterment?

Crunchbase reports that Betterment has raised $275 million
in total through seven rounds of venture capital funding. Its
key investors are Kinnevik, Bessemer, Menlo Ventures, and
Francisco Partners, among others.
Betterment's business was valued at $800 million during the

company's most recent round of funding, announced in July
2017. The company has almost certainly surpassed the $1
billion valuation mark, making it a unicorn.
Betterment does not publicly disclose any revenue or profit

figures. Betterment is probably not profitable yet to continue
funding its growth.
What is the Revenue of Betterment?

Betterment does not publicly publish its sales or profit data,
but according to Crunchbase, Betterment has raised a total of
$275 million across seven rounds of venture capital funding.
In July 2017, Bettermint’s business was valued at $800

million. Ever since, the company has surpassed the $1 billion
valuation mark, making it a unicorn.

Charles Schwab Business
Model
Charles Schwab offers a variety of banking and non-banking
financial services to individual and commercial customers,
most notably lending and investment services, to assist
customers in effectively managing their finances.
The Charles Schwab business model is focused on four

different avenues for revenue generation, which include
interest revenue; asset management fees; trading revenue;
and bank deposit fees, among others.
Charles Schwab has a $0 commission fee policy. However, its

services can be summarized as investor services, which offer
retail brokerage and banking services to individual investors,
and advisory services, which offer custodial, trading, and
banking services to registered investment advisors (RIAs).
What is Charles Schwab?

Charles Schwab is a financial services company that provides
financial advice and support to individuals and businesses
alike, ranging from banking to investment services, to help
customers manage their finances properly.
It is a bank holding company that offers wealth management,

securities brokerage, banking, asset management, custody,
and financial advisory services. It operates in two segments:
Investor Services and Advisor Services.
The Investor Services segment offers banking and retail

brokerage to individual investors, as well as retirement plan
services and other corporate brokerages to businesses and
their employees. The Advisor Services segment offers

custodial, trading, and retirement business support services.
A Short History of Charles Schwab

Chuck Schwab partnered with two other individuals in 1963 to
create Charles Schwab as an investment advisory newsletter.
As an auxiliary, the trio incorporated the company in 1971 as
Commander Corporation. However, in 1972, Schwab
purchased all of the company's stock and changed the name
to what it is today.
Charles Schwab began expanding in the 1970s and 1980s.

The company was sold to Bank of America for $55 million,
but was later purchased back by Schwab for $280 million in
1987. Charles Schwab then continued to scale new heights
and expand its presence in both online and offline
communication.
Charles Schwab is currently expanding and doing extremely

well for itself. Forbes 2022 ranks the company fifth overall
and first in banking and financial services, and it ranks 188 on
the Fortune 500 list. As of September 16, 2022, Charles
Schwab has a market capitalization of $130.64 billion.
Business Model Canvas of Charles Schwab
Customer Segments
Charles Schwab’s customer segments include:
Individuals
This comprises users that are seeking to invest in retirement
plans, access investment schemes, secure loans, and obtain
financial advisory services, as well as high-net-worth clients
requiring wealth management services;

Corporations
These are companies from a variety of industries that need
corporate banking, trading, and portfolio management
services, as well as financial business solutions.
Charles Schwab operates almost entirely in the United States,

serving a diverse range of domestic customers. However, it
also has a presence in the United Kingdom, Puerto Rico, and
Hong Kong, although they do not account for a significant
portion of the company's customers.
Value Propositions
Ways through which Charles Schwab brings value to its
customers include:
Its Industry Standing and Reputation

They carry themselves with a degree of prestige with
high-quality services. Charles Schwab has a good track
record as a reliable and efficient operator, with the company
commanding a positive reputation within the industry.
Its technical expertise and experience

The company ensures that only highly trained specialist
personnel are employed. These employees must be trained
across its two operating systems. Also, they make sure to
appoint experienced and well-informed industry executives.
Its customer service and personal care

Charles Schwab works closely with its clients. They do this by
discussing options and risks directly, while tailoring services
to the client's requirements.

Its broad range of investment products and financial services
The company provides various financial services to its
customers. These services serve a broad range of individual
and commercial customers.
The various online services, the company provides include
online access to certain foreign equity markets. This is largely
through its OptionsXpress platform.
There's also an option to download and use the mobile

application. The mobile application is available for iOS,
Android, and Kindle Fire users. The mobile application
provides much of the same functionality as the website.
The majority of Charles Schwab's sales are done through its

team of financial consultants. These financial consultants
operate out of the company's network of U.S. branches.
The company provides excellent customer service through

staff working at regional telecenters.
There are a number of independent investment advisors that

support Charles Schwab's internal sales and consulting
teams. These advisors are authorized to provide services on
the company’s behalf.
Customer Relationships
Through its online OptionsXpress platform and its mobile
application, Charles Schwab offers its customers a certain
number of self-service-based services. The functions
available to customers on these platforms include trading
stocks, tracking prices, making deposits, and managing
transaction histories. All of this can be done without
interacting directly with members of the Charles Schwab
team.

The company offers many of its services directly to customers
through its in-branch and telephone staff. These staffs seek to
establish and maintain long-standing client relationships.
The company provides adequate personal care to its clients,

including investment advice and risk information, discussing
all options and requirements with clients on an ongoing basis.
Customers can contact their personal assigned Charles

Schwab advisor via email or telephone. The company can
also be contacted via phone and its online chat service
concerning general issues and inquiries.
Through its Insights portal, Charles Schwab provides its

customers with a range of online learning and research
resources. These resources include commentary on sticks,
markets, options, and international trading trends.
With the company organized online and in-branch

workshops, customers get the most out of its products and
services.
Customers can additionally interact directly with the company

through its social media accounts, including Facebook,
Twitter, YouTube, and LinkedIn.
Key Activities
Charles Schwab operates mainly as a savings and loan
holding company. The company engages in wealth
management, securities brokerage, banking, money
management, and financial advisory services through its
subsidiaries. The company’s operations are divided into two
segments, and they include:
● Investor Services: These services include the

company’s provision of retail brokerage and banking

services, retirement plan services, and other
brokerage services;
● Advisor Services: These services include the

company's provision of custodial, trading, and support
services, as well as retirement business services.
Charles Schwab and Co, Charles Schwab Bank, and Schwab

investment Management are all subsidiary companies of
Charles Schwab.
Key Partners
Charles Schwab has a number of partners, which support and
extend the company’s own product and service offerings.
These partnerships include:
● Distribution Partners: This comprises various third

parties, such as independent financial advisors, that
are authorized to provide certain services to
customers on the company’s behalf;
● External Service Providers: This comprises a range of

service providers to which the company outsources
some technology, processing, servicing, and support
functions;
● Strategic and Alliance Partners: This comprises a

range of companies from a variety of sectors, with
which the company shares tools and resources and
collaborates on joint projects.
Charles Schwab has agreed to a number of recent

partnerships. In 2014, a partnership between it and Hunter
Pence was established. This was to promote the company’s
brand.
It also has a marketing partnership with the PGA Tour that is

set to last 20 years, and has collaborated with American

Express on the development of the card company’s new
Platinum Card.
Key Resources
Charles Schwab’s technology and communications
infrastructure are its key resources. These resources include:
● Mobile and Online Platforms
● Sales and Distribution Channels
● Physical Branch Network
● Partnerships
● Personnel
Charles Schwab operates a network of 325 domestic

branches across 45 states, as well as single branches in the
UK and Puerto Rico. Additionally, through one of its subsidiary
companies, the company has a presence in Hong Kong.
Cost Structure
The costs that Charles Schwab is responsible for include:
● Maintenance of its technology and communications

infrastructure;
● The operation of its sales and marketing channels;
● The management of its partnerships;
● The implementation of marketing and advertising

campaigns;
● The payment of professional fees and use of vendor

services;

● The retention of its personnel.
In 2015, 13,500 Charles Schwab employees were

compensated and also received benefits worth $2.24 billion.
These compensations and benefits were covered by the
company. The company’s professional services fees totaled
$459 million for the year.
Its occupancy and equipment costs amounted to $353
million, and its advertising and market development costs
were $249 million.
Revenue Streams
Charles Schwab generates revenue through the following:
● Provision of various banking and non-banking financial

services;
● Investment advisory, a retail brokerage;
● Trading;
● Retirement plan services.
The company’s revenue is derived from administrative fees

and commissions associated with these services, the accrual
of interest, and trading activities.
In 2015, Charles Schwab generated $6.38 billion in annual

net revenue, compared to the $6.06 billion annual net
revenue of last year. 41% of the company’s 2015 revenue was
from the collection of asset management and administration
fees accounted for, with trading revenue representing 14%.
Net interest earned accounted for 40% of total revenue, with

the remaining revenue made up of the company’s other
business operations that do not fit into the activities of the
company’s two core business segments.

How does Charles Schwab make money?
On average, Charles Schwarb is currently providing services
to over 31 million accounts. They offer banking and brokerage
services with zero commission. How do they do these and
still make a profit? Read on and you will understand.
Interest Revenue
Yes, the thought of making money from zero commission is
uncommon. So how do they make the money? They make
their money via interest revenue from interest-earning assets.
These interest earnings include margin loans, investment

securities, etc.
Page 146 of Charles Schwab’s latest 10-K Form provides that
the business organization accumulate $6.5 billion of revenue
from interest.
The dissected analysis of revenue and interest-earning assets

made by the firm are shown below:
● Money receivables from brokerage clients are

estimated to be $848 million;
● Available for sale of securities is roughly $4.5 billion;
● The Bank loans generated revenue is $545 million;
● Securities lending revenue is estimated to be $334

million;
● Cash and investments segregated are $141 million;
● And lastly, cash and cash equivalents, $120 million.
Again, all these were made out of interest.

You can find all of Schwab’s released financial reports via
Charles Schwab’s 10-K Annual Report investors section on
their webpage.
Asset Management And Administration Fees

The company makes money from its free trading business
model. These business models are asset management and
other administrative fees.
The asset management services come with a certain

percentage taken as an advisory fee on the eligible
portfolios.
The company’s management fees start from 0.55% to 1.00%,

with a minimum of $25,000 to $1 million in the account. This
will depend on the account type and strategy.
This revenue model accounts for 30% of its total revenues in

2020. This model, however, is Schwab’s second-largest
revenue stream.
Trading Revenue
There is also a revenue model known as trading revenue,
through which Charles Schwab makes money.
Trading revenue is the revenue earned from order flow
revenue, commissions, and principal transactions.
This may seem similar to the $0 commission or free trading

campaign made by the company, but this revenue is not
applicable to all.
Trading revenue is only applicable to sales-pitch, online,
ETFs, and self-trades of stocks, in that order.
To exchange Mutual Funds, Futures Options, CDs, Corporate

and Municipal Bonds, Foreign Bonds, etc., you’ll pay either
commission fees or trading fees, or both.

Bank Deposit Account Fees
In 2020, Schwab’s bank deposit account fees were estimated
to be $355 million (3% of total revenue). This is for the
Charles Schwab Corporation.
The corporation has some money transfer options, and all of

them are free, excluding wire transfers.
Other Revenue
The “Other Revenue” is a revenue model Charles Schwab
uses to make money.
In Charles Schwab’s 2020 10-K Form, the company

mentioned “Other” as her fifth and last revenue stream.
This “Other Revenue” stream has brought in $332 million,
and that’s 3% of the financial institution's net total revenue.
But what are these “Other Revenue” sources? These are

exchange processing fees, software fees, certain service
fees, and non-recurring gains.
What is the Charles Schwab business and revenue model?

In as much as Charles Schwab Corporation has claimed to
have zero commissions and a free trading business model,
they make money through a few revenue streams.
These revenue streams include:
● Fee-for-service (FFS) business model
● Interest revenue model
● Commission-based business model

● Freemium, i.e. upselling business model
● Mergers & acquisitions (M&A) business model
So the question “how does Charles Schwab make money?”

should not be one without an answer, as detailed
explanations have been made available in this article.
Acorns Business Model

Acorns’ business model charges monthly subscription fees,
interchange fees from purchases, referral fees, interest
earned on cash, and annual management fees for accounts
above $5000.
What is Acorns?
A lot of people want to save but often battle with the idea that
it has to be done with a substantial amount, which is where
Acorn comes in
Acorn is a fintech company that is known for its

micro-investing mobile platform that links itself to a bank
account and allows one to invest money into different things.
How does it do this?

Say a person wants to buy a glazed donut in Starbucks for
$1.91, Acorn simply rounds that price up to $2 and invests the
9 cents in shares of a diversified index fund.
This platform is for people who are busy with daily activities
and can’t regularly check their investment portfolios, or
people who want to enter the stock market but don't have
significant capital investments.
A Short History of Acorns

Acorns was launched on the 29th of February 2012. It was
founded by five entrepreneurs (Jason Martell, Jeff

Cruttenden, Walter Cruttenden, Jennifer Barrett, and Mark
Dru) in Irvine, California.
In late 2011, Jeff brought an idea to his father about taking

advantage of the rising popularity of smartphones. The idea
was to make investments more appealing to the general
public, using the popularity of smartphones to create a
platform for passive and incremental investing.
In March 2014, Acorns was officially launched with an app

compatible with both iOS and Android. Its first product,
Acorns Invest, which allowed its users to start investments
with spare change, launched with its now CEO, Noah
Kernerand, garnered public user interest and since then has
attracted over a million customers including Hollywood big
weights Jennifer Lopez and Dwayne Johnson.
How Does Acorns Work?

Acorns is an investing platform that is primarily known for its
micro-investing feature, which allows you to invest spare
change into stocks.
For instance, when a customer buys a smoothie for $4.30,

Acorns gives the option of rounding the cost up to $5 and
putting the 30 cents into the user's investment account. This
is all according to the user's investment plan, of course —
conservative or aggressive. When the money reaches a
minimum of $5, Acorns then invests the money in
Exchange-traded funds
Depending on the age group, proximity to the retirement of
the user, and the customers' personal preference, the
company’s individual accounts automatically start saving a
certain amount per month.
Acorns comes with a spending account. This spending

account (bank account with Acorns) comes with a number of
features such as automatic spare change investments in

one’s ETF portfolio, a debit card, checking, investment, and
retirement accounts all in one place, and insurance coverage
of up to $250,000 through the FDIC.
Acorn equally has partnerships and affiliations with other

companies, and using its spend account or its debit card
allows the customer cashback on products from these
companies.
Acorn offers financial literacy programs and offers parents the

ability to set up investment accounts for their children, as well
as apportion a percentage of their earnings and spending
towards investments for the family.
Since Acorns is a mobile company, its products are

accessible through mobile apps downloadable on iOS and
Apple devices.
How Does Acorns Make Money?

Acorns makes money through monthly subscription fees,
interchange fees from purchases, referral fees, interest
earned on cash, and an annual management fees for
accounts above $5000. Below is an explanation for each of
these revenue sources.

Subscription Fees
Acorns has three different subscription options: the lite,
personal, and family subscription
Lite subscription plans come with a $1 monthly subscription

fee and offer users the Acorns invest, which automatically
rounds up their change and invests it in ETFs. Users also get
bonus investments when conducting business with over 350
business partners of Acorn.
The personal subscription charges $3 monthly and includes

the benefits of the lite plan with later and spend products.
Later being a retirement account plan with tax advantages
and spend being a checking account which allows benefits
from no atm fees and a 10% bonus or more in investments to
a built-in investment account.
The family subscription is $5 and comes with the benefits of

both the lite and personal subscription plan and an additional
Early product that allows parents to create an investment
account for their kids as well as get financial advice and set
recurring investments.

Interest On Cash Balance
Acorns loans out money, like any other bank, from their users,
accounts to other financial institutions, individuals, and
businesses and gains money from the interest earned on
those loans.
Management Fees
Acorns require an annual management fee of 0.25% for
accounts with more than $5000. This covers the professional
fees for investing the money in the account of the given user.
For users with less than $5000, no fee is charged except the
monthly subscription fee.
Referral Fees
Anytime its members buy something from its 350-plus found
money partners, Acorn gets a referral fee. The referral fee is
part of individual agreements stated in the partnership
contract and entails a percentage fee of the overall purchase.
This can also be viewed as the cashback the customers get.
Acorn then adds this money back to its customers' accounts
or invests the money.
What are the Features of Acorns?

Saving and investing are most often an issue amongst
people. Some want to save but believe they don't have or
make enough to do it, and some want to invest but don't feel
like they have the substantial income to do so. Acorns
bridges that gap. Acorns is a platform that helps with easy
automated investing and saving.
Acorns Invest
A mobile platform that makes it easy to invest, Acorns Invest
uses your spare change to work for you and generate

savings as well as an income.
Acorns Spend
Banking services such as direct deposits, a debit card, and an
FDIC-insured checking account. This helps not only to
manage one's investments, savings, and checking account all
in one, but also offers cashback when you see the checking
account to buy products in partnership with Acorns.
Acorns Later
This helps to set up retirement planning options. It also
assists in managing one's investment portfolio to more
conservative options as one draws closer to the retirement
age.
Acorns Early
This helps to begin early investing in a child's future with as
little as 5 dollars with no penalty incurred on withdrawal if it is
for the benefit of the child.
Acorns Earn (Found Money)

When one shops with their debit or credit card from acorns
from the 350+ found money partners, the individual stands
the chance to save or reinvest money from their purchase
through cash backs.
Success Story of Acorns

Acorns, its legal name being Acorns Grow, Inc, was
established on February 29, 2012. It was founded by five
entrepreneurs (Jason Martell, Jeff Cruttenden, Walter
Cruttenden, Jennifer Barrett, and Mark Dru) in Irvine,
California. In late 2011, Jeff talked to his father about taking
advantage of the rising popularity of smartphones.

The idea was to make investments more appealing to the
general public by using the popularity of smartphones to
create a platform for passive and incremental investing.
Acorns was officially launched with an app compatible with

both iOS and Android in March 2014. Current CEO, Noah
Kerner launched, Its first product Acorns Invest, which gave
its users an opportunity to start investments with spare
change. The result being within the first ten weeks of testing,
Acorns was up to 10,000 customers investing an average of
$3 daily.
Kerner is an entrepreneurship guru. He began doing DJ gigs

at the age of 13 and worked at a Super Bowl after party on
the Tonight Show with Jay Leno and Jennifer Lopez.
Financing his studies of economics and psychology at

Cornell, Kerner was at the peak of his entrepreneurship game
and had already founded three businesses by 28. These
companies were noise; a marketing agency, one level; a
digital market for hip hop, and Soundproof; a music agency
that handled musicians. He equally made a lot of investments.
Acorns was one of them.
Not too long after his investment, the founders of Acorns

asked him to become the new CEO. Kerner immediately
accepted the offer.
Under his leadership, Acorns dramatically improved in terms

of products and users. One of the best of these years was
2020. Government stimulus check activity increases
investment activity on the platform.
The company equally opened its doors using ZipRecruiter to

users who found that they could add value to the company,
by creating job opportunities.

In 2021, as a result of the GameStop frenzy that left
thousands of users dissatisfied, Acorns gained more than
500000 new members. With its constant expansion, Acorns
outgrew and bought several of its competitors, like Pillar Life,
expanding and growing exponentially.
Now, Acorns serves about 11 million members with different

investment plans, partnerships, and services and houses
more than 400 employees in its offices in New York and
Irvine, California.
What is the Future Growth Strategy of Acorns?

Acorns accounts generate about $12 annually, which is next
to nothing for the company, which is why the company has
divulged in order to increase its sales.
With plans like Acorns later in place to provide customers

with reserve funds at the peak of their careers, Acorns has
partnered with PayPal to increase its constituency and new
technologies in the form of B2B services are being formed as
they have demonstrated to be an important source of
revenue.
What is the Revenue of Acorns?

Private companies like Acorns are not required to disclose
their revenue, but it is rumored that Acorns is approaching
$100 million annually
What is the Funding and Valuation of Acorns?

Crunchbase has released that Acorn has acquired $207
million across 11 rounds of venture capital funding. Investors
in Acorn include PayPal, Boeing, DST Global, Bain Capital
Ventures, AirBnbs, and singer cum Hollywood actress
Jennifer Lopez.

Acorns is now valued at $1.9 billion according to Acorns CEO
Noah Kerne as of the 9th of March 2022
Wealthfront Business Model

Wealthfront is an automated investment platform that
provides products for investing, retirement, and cash
management. Wealthfront's business model is based on
charging consultation fees, interbank fees, interest on cash
deposits, and lending money to retail investors.
Wealthfront makes the majority of its money from a 0.25%

annual advisory fee on assets under management.
Wealthfront believes that its lower fee structure, which is a

quarter of the industry average, will increase investor
balances. Because the organization does not charge a
management fee on balances under $5,000, this is critical to
them.
What is Wealthfront?
Wealthfront is a FinTech company that provides retail
investors with various fund management and investment
products.
Wealthfront, founded in 2008 and headquartered in Palo Alto,

California, has grown to become one of the country's leading
robo-advisors. The company manages more than $20 billion
in assets and has raised a total of $204.5 million.
A Short History of Wealthfront

Wealthfront, based in California, is an automated investment
service that offers retail investors' investment, retirement, and
cash management products.
It was founded in 2008 as a mutual fund analysis company by

Benchmark co-founders Andy Rachleff and Dan Carroll. The
company quickly shifted its focus to wealth management,
rapidly increasing its assets under management in the years
that followed.
Wealthfront was named one of the top ten best robo-advisors

by Business Insider in 2020. Shortly after, the company
revised its mission statement to emphasize its preference for
people over institutions.
Wealthfront is now focused on offering an automated,

data-driven investment service with significantly lower fees to
tech-savvy Millennials
How Does Wealthfront Work?
Wealthfront's mission is to offer a variety of fund management
and investment options to individual customers. Wealthfront
provides high-interest checking accounts at no cost. Clients
can open a free account.
Clients who open an account with Wealthfront can have a

high-interest checking account without having to pay any
fees. Along with receiving a debit that can be used for
purchases, users also benefit from its 0.35% APY. Green Dot
Bank partnered with the company to offer this checking
account.
Users of Wealthfront have the option to choose how much of

their account balance should be invested each month. The
majority of the money is invested in a globally diversified
portfolio of low-cost index funds (mostly ETFs).
Wealthfront's Portfolio Line of Credit feature allows users to

borrow money as well. The user's account balance and credit
history are then checked by Wealthfront. Loans can be
approved in as little as one business day if everything is in
order.

Furthermore, the company offers an abundance of
educational content on how to maximize one's savings, how
to save for retirement, and general money management and
investment advice. Wealthfront employs a team of PhDs in
business and economics to provide its users with
academically sound advice.
Customers can access Wealthfront through its website or by

downloading the company's Android or iOS app.
How Does Wealthfront Make Money?

Wealthfront generates revenue through advisory fees for its
investment products, loan interest, debit card fees, and
compensation from its partner bank (Green Dot Bank).
Advisory Fee
Wealthfront charges a monthly advisory fee of 0.25% of the
account balance. If a user has $10,000 in their account,
Wealthfront will charge them $2.08 per month.
According to the company, its advisory fee is less than a

quarter of the industry average, which is around 1%.

Wealthfront's investment decisions are algorithmically driven
and focused on low-cost, low-risk index funds (ETFs). This
algorithm enables it to execute over 900 trades each year.
This translates into a $150-time investment and a $6,321 fee
savings.
Tax-loss harvesting, which means finding opportunities to

reduce a user's tax bill, risk parity for accounts over $100,000,
which allows users to invest in a more diversified portfolio,
and smart beta are additional features.
Along with this, Wealthfront applies a small fund fee, which

ranges from 0.06 to 0.13%, levied by the organizations that
manage the index funds Wealthfront ultimately invests in.
Loans Against a Portfolio

This Portfolio Line of Credit solution allows users to borrow
money directly from Wealthfront.
Wealthfront evaluates the risk of credit default and uses the

user's account balance as collateral. The greater a user's
account balance and credit score, the more conveniently he
or she can obtain a loan. Users with an account balance of
$25,000 or more will be automatically granted a line of credit.
The interest that Wealthfront charges on the loan is how it

makes money. The user's account balance determines the
interest rate, which ranges from 2.40 to 3.65%. Users have
the option of borrowing up to 30% of their account balance.
529 College Savings Plan

Investing in a 529 plan has several advantages, the most
significant of which is a reduction in the amount of tax paid on
capital gains. A 529 plan is a great way to save money on
your child's college education while investing it in a manner

that is tax-advantaged.
Wealthfront's 529 college savings plan allows clients to save

automatically. The investment strategy is similar to its
standard investment product in that it focuses primarily on
low-risk funds.
Users pay the normal 0.25% advisory fee. A program

administration fee of 0.01 to 0.05% is also applied. Finally, ETF
expenses (the money charged by the ETF's operator) range
from 0.11 to 0.15%.
Cash Accounts
Wealthfront offers three types of cash accounts: Individual,
Joint, and Trust. Users can use the account to pay bills,
deposit paychecks, earn interest on their account balance
(currently 0.35% APY), and make payments using a
Wealthfront-branded debit card.
Opening an account requires a minimum balance of $1 and is

free of charge. Wealthfront monetizes these cash accounts in
two ways, either by investing the user’s account balance as
well as fees collected on debit card payments or by the fees
generated whenever a user pays with its debit card.
What is the Funding & Valuation of Wealthfront?

According to statistics by Crunchbase, Wealthfront has raised
a total of $204.5 million in venture capital funding over six
rounds. Greylock, Index Ventures, Benchmark, Spark Capital,
and others are among the notable investors in the company.
According to Pitchbook, Wealthfront is worth around $500

million. This is a significant decrease (by more than 28%) from
the company's 2014 valuation of $700 million.
What is the Revenue of Wealthfront?

Wealthfront's revenue has not increased to the point where
such a high valuation is justified. In 2019 the company's
annual revenue was only around $35 million.
Success Story of Wealthfront

It all started in 2008 when Andy Rachleff (CEO) and Dan
Carroll founded Wealthfront in Palo Alto, California as a
mutual fund analysis company by Benchmark co-founder
Andy Rachleff and Dan Carroll. As its assets under
management increased over the years, the company
switched its focus to wealth management.
Before launching Wealthfront, Rachleff helped other

businesses in the Valley establish worldwide dominance. In
2007, he launched the Fantasy Stock Exchange, which was
rebranded as kaChing and allowed private investors to
compete with friends, family, and other users on the platform.
The goal was to achieve the highest return on investments,
which would then be publicly shared on the platform and
could be copied by others who didn’t have the time to do
proper research.
kaChing aimed to increase transparency in the mutual fund

sector, which had previously been very secretive about the
returns it produced, as it only disclosed the positions it held
at the end of each financial quarter.
In 2010, kaChing was rebranded to Wealthfront. At the time of

the rebranding (AUM), Wealthfront had more than $100
million in assets under management.
The company's early success was largely attributed to its

stringent screening of the fund managers who applied to use
its platform. Only 10% of all applications were approved.
Wealthfront prides itself on being a transparent and

technologically advanced investment platform. Its fee

structure was always transparent to its clients. The platform
provided users with real-time visibility into how their portfolio
was performing. Aside from that, clients with balances of
under $25,000 were not charged advisory fees (and only
0.25% for anything above).
Furthermore, its platform could be used without much time

investment, thus allowing them to focus on their challenging
jobs. As a result, 50 to 60% of Wealthfront’s users were
based in Silicon Valley. In addition, more than 55% of its
clients were younger than 35.
By 2014, Wealthfront had reached the elusive $1 billion in

AUM milestone thanks to positive word-of-mouth and an
expanding selection of products. It reached $2 billion a few
months later, in early 2015.
Wealthfront is now the second-largest robo-advisor in the

United States. It now has more than $20 billion in AU and
over 300 staff.

4 TRENDS IN WEALTHTECH
With technology increasingly and steadily being integrated

into the investment environment, it is clear that the shift from
traditional banking practices to digital-based practices that
focus on accessibility, technology, and customer centricity is
here to stay. Identifiable trends have been noted in this
evolving industry, with these trends being based on clients’
habits and expectations.
High personalization
Research indicates that 80% of consumers are more likely to
purchase from a business that offers personalized
experiences. This is no surprise, as clients feel more
comfortable when their specific needs are taken into account
and provided for. Personalization of customer experiences
builds loyalty, increases customer satisfaction, and attracts
new clients by way of recommendations from happy clients.
Clients are more likely than not to give up the necessary

information needed to get an experience specific to them,
and wealth managers are part of service brands that offer
personalized customer service.
Investors are willing to give up the necessary data under the

assurance that their privacy will not be breached, and wealth
management service providers will play their part by
collecting that data and using it to generate value through the
use of big data analytics, artificial intelligence, and machine
learning algorithms.

Seamless UX
User experience (UX) has always been an important factor to
note when providing customer service. Offering a
smooth-sailing, stress-free experience to clients is key to the
financial technology industry, as the goal is to retain old
clients and garner new ones through the merging of
technology and human resources.
A stellar user experience has increasingly become a priority,

especially in this age of technology, where it has been noted
that consumers enjoy the convenience of online services.
Self-service technology has grown in popularity, and it is clear
that people prefer the seamless and easy process of
conversing with wealth advisors through digital channels.
The primary activity of the wealth management industry is the

interaction between clients and advisors, and today, this
merger of technology and wealth management has led to
investors choosing faster and more convenient methods to
get in touch with their advisors. The "anytime, anywhere”
options of video calls and live chats have become a staple in

the industry. Although these interactions take place over a
digital interface, self-service capabilities must match clients'
lifestyles and cover their needs in managing the investment.
A seamless user experience goes a long way in garnering the
trust of clients.
Cybersecurity
With wealth management service providers rapidly adopting
the hybrid model of wealth advisory services, cybersecurity
has become a huge topic of discussion. As these innovative
technologies become more and more paramount,
cybercriminals have become more sophisticated in their
methods and are steadily catching up.
WealthTech involves the collection of confidential data from

clients, so cybersecurity is of high importance. Wealth
managers and wealth management service providers are
expected to invest more money and effort in meeting
cybersecurity requirements and managing security risks.
Cybersecurity issues in the WealthTech industry include

malware attacks, social engineering attacks, software supply
chain attacks, and password attacks, amongst others. These
security risks can be mitigated through numerous options,
some of which include the use of AI to detect threats,
biometric options for users, two-factor password
authentication, etc.
WealthTech ecosystem
The incorporation of technology into the wealth management
industry has left many worried that these technological
innovations are here to replace the need for manpower and
take their place in the industry. This fear is unfounded, and it

is important to note that WealthTech incorporates technology
for both investment management professionals, as well as
individual end-users. This is what the WealthTech ecosystem
virtually means.
The wealth ecosystem refers to the collaboration between

technological startups and software development companies
and the people involved in deploying solutions within the
wealth management industry. WealthTech companies are
focused on providing their services to both WealthTech
management firms and advisors (Business-to-Business
services) and consumers (Business-to-Customer services).
The wealth ecosystem benefits all parties; for wealth
management firms and advisors, it allows them to present
their services to new markets via technology. Tech startups
get the bonus of increasing their portfolio, getting funding,
and accessing new markets by catering to the financial
business side of the economy, and customers are privy to the
convenience of technology in the investment sector.
WealthTech companies focusing on B2B

(Business-to-Business) focus on advanced technology
services for professionals and companies specializing in
investments. These services have brought on the merger of
various banking companies merging with tech firms, such as
J.P. Morgan acquiring Nutmeg or Finantix, and Tegra118
merging with InvestCloud. B2C (Business-to-Customer)
WealthTech companies work with clients directly through the
provision of portfolio management and other tools adapted
for the standard user. For example, Wealthsimple, a Canadian
company, offers automated investments for individuals.
The WealthTech ecosystem consists of various types of

services, and they are as follows:

Marketplaces
Marketplaces are centralized online platforms where
information on different types of investment funds and assets
is made available for financial advisors. Advisors can
compare products, select third-party investment models, and
make decisions accordingly, all the while retaining control of
allocation, trade implementation, and rebalancing.
Investment tools
WealthTech investment tools refer to the plethora of software
programs WealthTech companies provide. These include
programs that monitor portfolios, manage investment
planning, create notification alerts for setting goals, and
invest automation software. Some software products also use
artificial intelligence (AI) to assist the investor.
Compliance
Compliance monitoring solutions in WealthTech have to do
with the technology that makes sure the rules and regulations
of the wealth management sector are complied with. Also
known as Regtech (regulatory technology), it applies to
technological solutions for regulatory control and ensures
that all financial activities abide by regulatory compliance.

Financial advisors
WealthTech seeks to create a hybrid tech-human resources
model in the wealth management industry. Financial advisors
are one factor that bridges the gap. These are companies
that specialize in offering financial advice over the internet.
Robo-advisors
Robo-advisors are digital tools that use machine
learning-based methods to perform automated operations on
behalf of the client. The goal is to allow investors to make
smart investment decisions in a short amount of time, and it is
possible to invest across different markets with robo-advisors.
This, of course, depends on how the user has configured the
software.
Quant advisors
An extension of robo-advisors, Quant advisors are systems
that make use of machine learning and artificial intelligence
to manage investment strategies.
Trading platforms
Trading platforms are for both new, and inexperienced users
and experts. They are platforms that enable real-time trade
and often provide additional functionalities such as advisory
services.
Algorithmic trading
Algorithmic trading involves software that automates
real-time trading actions. Users can customize the services of
the software to their preferred trading specifications.
Social trading/investment
Social trading platforms sprung from the amalgamation of
social media and trading platforms. They allow investors to
share opinions, trading experiences, and replicate investment
models with other traders. This way, amateur traders can
learn from more experienced veterans.

Micro investing
A trend closely related to Fintech initiatives like lending or
crowdfunding, micro investing is becoming increasingly
popular in WealthTech. It allows clients to invest through
microcredits or small investments, thereby promoting saving.
B2B software providers

Business-to-Business service providers in WealthTech refer to
the tech-startups and software-development companies that
work with investment firms to create software that assists
professionals in investment, savings, and wealth. These
companies provide solutions in those fields and provide
technical and technological support to investment firms.
Big data analytics

When WealthTech service providers collaborate with
investment firms, analytics services are frequently included.
WealthTech companies can provide highly specialized
investment data analytics services for their B2B clients. Lack
of data and reliable insights often leads to bad investment
decisions — analytics providers stand as the solution to that
problem.

FUTURE OF WEALTHTECH
BUSINESS
WealthTech has steadily been on the rise and, considering the

impact it has had on the financial sector, it is clear to see that
WealthTech solutions are here to stay. So, where does that
leave us? How does the future of the WealthTech industry
look?
In the future, WealthTech innovations will become much more

available and innovative. Wealth management firms turn to
WealthTech to improve efficiency, cut costs, and keep up
productivity, so it is expected that new innovations or more
sophisticated versions of present innovations will be
developed. Predictive analytics technology and AI solutions
are constantly being worked on to improve B2B and B2C
situations in the financial industry.
Following that growth, cybersecurity companies will continue

to partner with WealthTech service providers to deliver
paramount security to user data. It is also predicted that cloud
computing in WealthTech as well as blockchain technology
will remain a trend in the industry. Another noted prediction is
that quantum computing will become a staple in assisting
wealth managers in improving investment decisions in the
long run. These developments will have an impact on the
entire industry and its clientele, including private banking and
high net worth (HNW) clients.
Sifted, a leading logistics intelligence software company,

predicts the following for the future of the WealthTech

industry:
Prediction 1: More
community-focused platforms
A phenomenon currently called "democratized WealthTech",
which entails that wealth-tech platforms will be focused on
community, has been predicted. These platforms already
exist in the form of social trading, but they are not yet as
popular as they could be.
These social media-inspired platforms take a communal

approach to trading and financial management, with features
that enable advisors and investors to communicate with each
other. Some firms are taking this approach to wealth
management, as building a welcoming community is
paramount to retaining happy clients and integrating
amateurs.

Prediction 2: Crypto and NFT
are here to stay.
Cryptocurrencies have seen a rise in the past few years, and
it is predicted that they will remain in steady demand and
even grow in popularity in years to come.
Experts argue that cryptocurrency is going to become “a

more institutional product” and urge the WealthTech industry
to take the opportunity to buy and sell cryptocurrency assets
like bitcoins and NFTs.
Prediction 3: Impact investing

is on the rise.
Impact-investing is when investors target industries that
produce social or environmental benefits. These investors
seek to support renewable energy, sustainable agriculture, or
other causes that they believe to be worthwhile. According to
a survey by The Harris Poll, a third of millennials use
investments that consider ESG factors. This is because a lot
of people want their investments to mean something and
make an impact.
It has been predicted that organizations focused on real

impact investing will begin to trend. This trend will only
increase as it is popular among the younger generation. "It is
expected that in 10-15 years’ time, impact investing will be just
called investing", Tom McGillycuddy, co-founder of social
impact investing firm CIRCA5000, says.

Prediction 4: WealthTech
platforms for groups
More and more companies are beginning to develop
WealthTech platforms that allow users to manage their funds
in groups; these groups include friends, couples, and families.
This is because, at some stages in life, people often move

from independently generating wealth to doing so with their
significant other, or close friends they wish to start a business
with, or family for one reason or the other. WealthTech
companies have acknowledged that and are now working on
filling that gap.
The Co-CEO of Qapital, a savings platform from New York,

Katherine Salisbury posits that investments made into
couples’ wealth management haven’t reached $10 million in
the United States in comparison to the billions of investments
into the wealth management space for single users, and this
might soon change. According to her, 'Heavy fintech users
are getting older, their lives are getting more complicated,
and they’re getting to a point where they have more wealth,
or they’re inheriting more wealth, so they’re going to demand
more robust products than perhaps what they got before.'
Prediction 5: More tech for

WealthTech
As mentioned earlier, it is predicted that technology startups
in partnership with wealth management firms will create more
innovative technologies for WealthTech.

Sifted cites banks as an example of areas in the WealthTech
industry that are still lacking in tech solutions. Although
technology is quickly becoming a staple, banks only
accommodate basic technology, and the process of going to
the bank is still stressful for clients, where the problem could
easily be solved with the right technological innovations.
Experts predict that better customer service technology

would be made, but this change would not come about
quickly.
Prediction 6: The WealthTech

growth story continues
The prediction that the WealthTech market will grow rapidly in
upcoming years comes as no surprise. Technology serves as
a symbol of convenience in the modern sphere, and more
wealth management companies will partner with
tech-startups to get in on the innovations needed to please
customers.
Experts agree that the WealthTech business will continue to

grow, with cryptocurrency being the catalyst for it.
Prediction 7: Challenging
period ahead
Analysts predict that although the WealthTech market will
experience growth, there will also be challenging times due
to economic and market changes.
Investors are generally happy when their investments make

high returns. Unfortunately, the situation could change and
when money becomes scarce, many may not be ready to
adapt their strategies.
FUTURE TECHNOLOGIES IN
WEALTHTECH
As mentioned earlier, WealthTech is steadily and quickly

growing, and more and more wealth management firms are
adopting the hybrid tech-human resources model of
operation. However, there is still space for more technological
advancements. Listed below are some new technologies that
could soon become commonplace in the WealthTech
business.
Extensive adoption of cloud

technologies
Cloud technology is the on-demand availability of data
storage, computing power, and other computer resources
without direct active management by the user. WealthTech
platforms thrive on internet cloud-hosted services as they are
convenient for management of WealthTech platforms. As
more wealth management firms are moving to mobile apps,
the demand for cloud technology will increase, and we can
expect to see more progress in that field.

Introduction to Quantum
Computing
Presently, Quantum Computing is still in its early stages, but it
is a rapidly emerging technology. The science behind
Quantum computing is to use the laws of quantum mechanics
to solve problems too complex for the everyday, classical
computer. Today, IBM Quantum makes real quantum
hardware — a tool scientists only began to imagine three
decades ago — available to thousands of developers.
Quantum hardware is steadily becoming more available to

thousands of developers, something that wasn't possible only
three decades ago, and the Financial Times predicts that by
2025, quantum computers may be made commercially
available.
WealthTech deals with mathematical analysis and quantum

computers could be used to strengthen the now weak and
simplistic analysis that classic technology brings.
Technologies for social impact

As noted earlier, impact investment has become a trend,
especially among the younger generation. Companies whose
practices hurt the environment or society will soon be opted
out, and it is clear that WealthTech firms would need to take
part in impact investing so as not to lose customer loyalty and
satisfaction.

Use of automated advisors
Robo-advisors have become a trend in the wealth
management sector, and the use of machine learning-based
methods to perform automated operations on behalf of the
client will continue in the investment industry. However, the
use of robo-advisors is still in its early stages, which makes
many things difficult. A lot of people still prefer to seek the
services of professional financial advisors, even though many
firms still make use of robo-advisors.
Integrating blockchain into

WealthTech
Investment and wealth management firms around the world
are still researching the viability of blockchain technology.
The reception of blockchain technology from the public is
mostly mixed; many believe it is nothing but a scam, while
another group of people see blockchain technology as worth
investing in. Whichever the case, Blockchain technology is
capable of creating new classes of assets and assisting in
asset management.

CONCLUSION
So, where does that leave WealthTech now? Well, WealthTech
is clearly making major positive changes to the wealth
management industry, from streamlining mundane tasks to
growing wealth advisor businesses to reducing costs for
wealth management firms. WealthTech solutions make it quick
and convenient for clients to interact with advisors, and
cybersecurity measures give clients an extra feeling of safety
when it comes to investments. It has brought new
opportunities for technology startups and opened wealth
management firms to new markets and possibilities.
WealthTech has made waves in the wealth management

sector, but there is still more to be done and more that is
being done to improve its efficiency. New technologies are
emerging, old technologies are being fine-tuned, and more is
being put into place to maximize client convenience and
satisfaction. As the shift to the next generation of wealth
management solutions begins, tech-startups will hurry to
continue thinking up new solutions to wealth management
problems, and investments will be made to keep up with the
right WealthTech solutions.

REFERENCES
The following references were consulted to create this Super

Guide:
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➔ https://www.electronicid.eu/en/blog/post/wealthtec
h-investment-management/en
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➔ https://de.scalable.capital/en/about-us

ABOUT THE AUTHOR
Daniel Pereira is a Brazilian-Canadian entrepreneur that has

been designing and analyzing business models for over 15
years. You can read more about his journey as a Business
Model Analyst here.
E-mail Daniel if you have any questions

at: daniel@businessmodelanalyst.com
You can connect with Daniel at Linkedin:
https://www.linkedin.com/in/dpereirabr/


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Wealthtech

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The Business Model Analyst is a website dedicated to

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Types Of Wealthtech Companies 20

Wealthtech Solution Market Overview 27

Key Market Players 29

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Why Use Wealthtech Solutions? 35

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What Does Wealthtech Mean For The Financial Services

Why Wealthtech Is Important For Advisors And Wealth

How Wealthtech Platforms Solve The Financial Literacy

Case Studies Of Wealthtech Business 49

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4 Trends In Wealthtech 106

Future Of Wealthtech Business 113

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About The Author 126

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This exclusivity posed a problem for individuals and less

This is where WealthTech comes in. The revolution of

Their new understanding of personal savings and asset

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To understand what WealthTech is, we must first define wealth

With that same logic, WealthTech is the use of technology in

It is the integration of innovative technology with the financial

WealthTech allows its users to utilize the latest in technology

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In the financial sector, companies must comply with KYC

On that note, both Fintech and WealthTech are regulated

Although WealthTech and Fintech work alongside each other,

To draw up a rough comparison between the two, consider

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The two have now become interconnected when FinTech

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In recent times, there has been a characteristic incentive to

Stage 1: Origin of WealthTech

Stage 2: Growth of WealthTech

Betterment was launched around the same time as the 2007

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When merged, the difficulties many businesses had to tackle

In 2011, yet another robo-advisor, but London-based this time,

In 2012, micro-investing pioneer Acorns was founded, and

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And this brings us to the present, where the best WealthTech

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WealthTech is not one thing in particular, but rather the

But the question remains, how is this accomplished? Below is

Digitized finance companies

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With digital onboarding solutions such as KYC (Know Your

Everyone is aware of the amount of advertising that these

Social trading and digital

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From online platforms to software tools, digital brokers bring