This Is the Problem with Traditional Wealth Management

Modern investors demand more, particularly millennials.

In our everyday lives, we now pay less and get more. Companies like Amazon, Netflix and Uber are thriving because they make it easy and affordable for us to enjoy incredible user experiences from the comfort of our homes. Why should investing be any different?

For decades, wealth management stayed in its comfort zone, charging high fees for providing advice to a small group of high-net-worth clients. But thankfully, that is now changing, and the industry is opening up its doors to the masses. A new breed of financial advisors is doing for wealth management what Amazon did for commerce.

Cost and convenience are key factors for investors

These days, investors want affordable financial advice tailored to their individual needs. They want to know how much they’re paying for that advice. This means that wealth advisors must be transparent about fees. Crucially, they must also say why they charge them in the first place.

This requires a change in the way that advisors do things. Advisors have traditionally been opaque when it comes to charges. They would blend several different types of fees – onboarding, advisory, transaction and brokerage fees to name but a few – into one number.

But it’s not just about costs. People also demand convenience, with on-demand access to their investments across platforms. To be successful, wealth management needs to blend seamlessly into our lives, making it easy for us to invest and manage our money.

The problem with traditional wealth management

Wealth management was simply out of reach for most people. This meant that the vast majority missed out on the chance to invest their money and build a secure financial future.

There are a number of reasons for this.

The vast majority of people don’t have the time or money to engage an advisor for financial advice.
A lack of engagement with personal finance hasn’t helped, with people often unaware of their options when it comes to wealth management.
Aggressive cold callers, high-profile mis-selling scandals and financial crises have undermined trust in financial services and made it hard for advisors to break through.

Thanks to the limitations of the traditional wealth management approach, a significant gap has emerged. And into that gap has stepped a new breed of advisors offering high-quality, low-cost financial advice.

Enter robo-advisors

The next generation of financial advisors go by different names, like “automated financial advisors”, “robo-advisors” and “digital advisors”. But they all have one thing in common. They use technology to make personalized financial advice easier and cheaper to access. The power of automation is opening wealth management up to a much broader audience.

Platforms like Sarwa make it easy to open an account and start investing, inviting you to answer a few questions to assess your risk appetite and build a portfolio that’s right for you consisting of low-cost passive products like ETFs.

Once you’re set-up, robo-advisors help you to manage your investments on an ongoing basis to ensure they perform well in changing markets. For this, they charge much lower fees than traditional wealth managers, often over 1% less. This means your money grows much faster, thanks to the power of compound interest.

Why Sarwa?

Sarwa is one such advisor, focused on helping people in the Middle East invest and grow their money. Our cutting-edge platform reduces the amount of time and money that you need to spend managing your money.

It takes less than 10 minutes to open an account with us and we match you with a personalized portfolio of diversified, low cost funds, using automated rebalancing to keep you on track.

If you’re interested in finding out more, get in touch. Our team of experts are available for any question you may have.

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