Our Co-Founder's George Lucas new book, "The Prosperity Revolution", documents his insights and wisdom, derived from his global journey in founding WealthTech businesses.
The Promise of WealthTech
Low-income households often struggle to make sound financial decisions due to a lack of access to resources and guidance. Without access to the right tools, it can be difficult for low-income households to manage their debt and investments and more effectively. This can lead to further inequality in society and an inability for these individuals to build wealth.
WealthTech may be a solution by creating technology solutions delivering wealth management offerings tailored specifically for these consumers with little to no access to financial advise. WealthTech can provide access to the same powerful algorithms that wealthier people use when managing their finances. With these tool at their disposal, they may be able to make better informed decisions about how best to manage their money - leading them towards greater financial stability and reducing inequalities in our society.
When it comes to financial choices, households are faced with a wide range of complex decisions. How much of their income should be saved or consumed each month is the foremost consideration; this decision has a tremendous impact on wellbeing and the prospects of both current and future generations. Even small differences in the rate of monthly saving can result in substantial differences in wealth accumulation over time.
Other financial decisions include how to invest savings in different assets (such as stocks, bonds, and housing) based on their risk-return profiles; which sources of financing should be used for big-ticket items such as cars or college degrees; and ultimately, the question of how to manage debt to maximize the potential for financial success while minimizing stress and anxiety. Ultimately, finding the right balance between income, savings, investing, debt, and expenses is key to financial security and peace of mind.
Every household should strive to make informed decisions concerning their personal finances to secure a better future for themselves and their families. Financial advisors can be consulted to help make the most informed decisions possible. The financial choices households face are not easy, but with careful planning and assistance from a qualified financial advisor, they can be made in a way that optimizes the potential for success and minimizes the risk of failure. But many individuals and households cannot access financial advisors.
Most individuals and household around the globe encounter financial decisions on a daily basis, but few of them possess the knowledge and resources to make informed and wise choices. To help these people, traditional human financial advisors and financial planners have stepped in to aid. Unfortunately, due to the limiting factor of time, most financial advisors are only willing to service wealthier individuals, who are already financially secure and have the resources and understanding to make better decisions. Unfortunately, this lack of access has likely been a contributing factor in the increasing economic inequality that is seen across the US and other nations during recent years. In order for everyone to be able to receive access to sound financial advice, new technologies and innovations are needed to bridge the gap between those with and without access.
In the past decade, there has been an explosion of WealthTech applications offering robo-advise in some form. These automated advisors use algorithms to collect and analyse transactional data from individuals, allowing them to make more informed decisions about their finances. With these tools, households can gain access to sound financial advice that may have been previously unavailable or too expensive.
Although WealthTech is still in its early stages, their potential to improve the financial decision making of consumers is tremendous. WealthTech offerings vary widely and may employ different algorithms with varying levels of sophistication. Some offerings rely on basic questionnaires and automated investment advice, while others use more advanced predictive analytics and machine learning to offer advice tailored to an individual’s circumstances.
Despite their promise, however, some examples of WealthTech have delivered mixed success. For instance, some robo-advisors may be unable to accurately assess the financial objectives or risk tolerance of individual households, leading to inaccurate advice. Given the potential of WealthTech to improve decision making, it is important to consider how they can be used most effectively and the challenges they face. For instance, there are concerns that algorithms underlying some WealthTech offerings may be biased or opaque.
There is also a need to consider how WealthTech can be used to ensure access to sound financial advice for the financial illiterate. Ultimately, the success of WealthTech in improving financial decision making will depend on effective of the algorithms employed, financial services law and regulation and a comprehensive understanding of the potential benefits and drawbacks WealthTech’s can offer.