The concept of wealth is becoming ever more nuanced and changeable. Fintechs must create the technology to reflect not only changing needs, and but also changing states of mind.
Current uncertainty in the financial markets juxtaposed with the relative faith in physical assets, for example, property and classic cars, reflects differing, even contradictory value perspectives.
Interest rates around the world are flatlining. The FTSE 100 performance over one week is down 0.63 and post-Brexit nervousness is spreading: the CBOE Volatility index, also called Wall Street's "fear gauge" his risen 33% to 16.56 points, its highest level since the Brexit vote in June. Meanwhile, Taiwan’s Taiex dropped 1.2%, finishing at its lowest levels in months, and Hong Kong’s Hang Seng Index is at 3.3% to 23310.33, the biggest drop since February.
Yet despite this situation, the market in physical, or ‘passion assets’ remains buoyant. In the past five years, cars, coins and jewels have returned 161%, 92% and 65% respectively, eclipsing Britain’s FTSE-100 stock index up 15% since the start of 2011. According to the wine industry´s leading benchmark Liv-ex, fine wine is up 11.45% this year compared with 10.23% for the FTSE 100.
In Asia, investments in physical assets remain promising, with notable investments in porcelain, artefacts and overseas real estate. Of the latter, Chinese investors dominated Asian outbound investment in the first half of 2016 accounting for $16.1 billion of investment, more than double that of the $7.3 billion figure in 2015.
One can conclude that people either have less faith in cash and have more faith in physical assets, which can outlast the flippancy of market, and one day yield a more practical return, or that wealth as a concept exists across a broader, more emotional spectrum. In Philip K Dick’s classic novel, The Man in The High Castle, the protagonist seeks and encounters various objects, which although have no financial, practical or artistic value have a property known as ‘Wu’ and are utterly compelling. He simply must have them. This emotional, personal value perspective resonates with Personal Financial Management (PFM) tools enabling people to track and measure what they personally value at any given point in time.
This in itself is now not enough. We need to be able to take a holistic view of our wealth. This means having access to tools that enable us to also enter the value of our physical assets and liabilities onto PFM software. This effectively allows us to credit rate ourselves.
A range of assets are now supported on our software, including real estate, art, wine, stamps, gold, classic cars and aircraft. This ‘offline’ assets and liabilities feature is available through our API or offered to millions of users of our white label Money Manager solution. Online and offline assets & liabilities are displayed on a single interface viewable on a desktop or mobile device. The result is a 360° degree vision of wealth, an emotion-gauge, enabling consumers to factor in what really matters to them.
Our vision is to empower people to take stock of all their assets and track them in real time. We must be able to audit what we value and what we own in our own terms. There is not a one-size-fits-all solution to Money Management. Investment and spending decisions are effected by a range of personal factors, including goals and risk-tolerance, in short, emotion.
Our onus on taking personal control over all of our finances is reflective of the evolution of Robo-Advice which is becoming ever more personalised as it uses specific data as an information dispensing tool. For advisers looking to maintain an ongoing relationship with clients, the clients’ personal financial data, goals and needs must be understood to be acted upon. Wealth Managers need a truly 360° view of their client finances, including held-away accounts; and that’s what eWise offers with a financial data aggregation solution. We can automatically connect to a variety of online sources including bank accounts, pension funds, investment portfolios, credit cards and loyalty programs. This will help Wealth Managers give us more tailored and real-time advices.
As Shakespeare said; ‘He that wants money, means, and content is without three good friends.’ It’s technology that can provide the link between all three, and as PFM solutions become ever more intuitive, we must get the clearest picture of what we cherish in assets alongside what we own and owe in ‘cold hard cash’ if we want to make the best decision for our unique circumstances.
By Dean Young, Head of Product Management, eWise.