More than two-thirds of UK investors are comfortable with artificial intelligence (AI) being used in investment decision making, according to a research survey by Avaloq.
Only 15% of respondents said they would be comfortable with an entirely AI-driven analysis of their portfolio. But more than half were happy with a blended approach that combined AI and human involvement.
“Our research reveals that investors are more open to using AI in the investment process but still want the human touch, indicating natural opportunities for wealth managers to integrate AI into their offerings in a way that augments the service they provide,” Gery Zollinger, head of data science at Avaloq, said.
A separate study by CoreData found that 32% of UK financial advisers think AI will “revolutionise” the sector. CoreData found that this figure increased to 40% for advisers focused on high-net-worth clients.
Lingering concerns
It is no surprise then that three in ten advice firms say they will be “competitively disadvantaged” if they don’t embrace the technology.
There remains lingering concerns, however. 42% of advisers believe that AI raises serious risks for advice firms in terms of client confidentiality and data protection. Over a third do not trust the information produced.
An emerging technology, known as explainable AI, may help quell these fears.
Explainable models?
Explainable AI, or XAI, allows users to comprehend and trust the results and output created by machine learning algorithms. The technology stands in contrast to the ‘black box’ technology which is currently the standard.
‘Black box’ AI offers no transparency. Not even the engineers or data scientists who create the algorithm can understand or explain what exactly is happening inside or how the AI arrived at a specific result.
In a world as highly regulated as financial services, transparency is essential. XAI could go a long way in building trust in the use of AI in the industry.
London, England, 9th April 2024: Industrial Thought Ltd. – a group of companies specialised in investment taxation, financial data, and related consultancy services – has announced a £100K investment in Integrum ESG, alongside a partnership agreement to serve the wealth management industry with ESG data.
The unique SaaS platform offers a ‘glass-box’ approach to ESG analysis and risk assessment, giving wealth managers a simple way to gather validated and explainable ESG data.
A growing number of investors want ESG-friendly portfolios that align with their personal values, creating challenges for the wealth management industry. With the majority of ESG ratings generated using black-box models, wealth managers find it hard to justify their recommendations to clients. This comes at a time when doing so is more crucial than ever, with the FCA’s new anti-greenwashing rules adding regulatory pressure to provide interpretable information about sustainable investment products.
Integrum ESG has been developed by investment professionals to solve the problems associated with opaque methodologies and provide complete clarity. The easy-to-use platform gives clear reasoning for its ESG scores with full visibility into the underlying data. As a result, wealth managers can understand and explain a company’s ESG challenges and how it manages those challenges in the market. Other unique features include bespoke reporting solutions and real-time controversy alerts.
Shai Hill, Founder and CEO of Integrum ESG, commented: “We’re delighted to partner with Industrial Thought and its group company Financial Software Ltd. to serve the private wealth management industry better. Wealth managers are now facing regulatory pressures to consider their clients’ sustainability preferences, as well as demand from clients to receive a sustainability assessment within their regular investment reports. The ESG ratings used by many wealth managers are completely opaque, creating a risk of greenwashing claims. We look forward to working with the team to broaden access to our one-stop, easy-to-understand, affordable ESG solution.”
Nuno Godinho, Group CEO of Industrial Thought Ltd., added: “Trust and transparency are crucial if we want to unlock the full potential of ESG investing. Integrum ESG is an essential tool for wealth and asset managers, advisors and even investors to conduct a comprehensive ESG analysis and personalise their portfolios according to their sustainability preferences. This investment enables us to share its capabilities with our clients, expanding how we support them in providing accurate and explainable data.”
Industrial Thought is committed to advancing the future of financial services through innovative data-driven solutions that wealth managers and investors can trust.
About Industrial Thought Ltd.
Founded in 2013, Industrial Thought Ltd. is the parent company for a group of companies in the field of investment taxation, financial data, and related consultancy services. It aims to drive transformation by creating a complete suite of data, platform, and marketplace services to raise standards and speed up innovation.
Companies within Industrial Thought include:
- FSL (Financial Software Ltd.), a provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator.
- Raw Knowledge, which creates, compiles, and validates specialist financial information underpinning the group’s wealth management products and services, such as tax calculation.
- Thought Train, facilitating the creation of a standardised master data structure for financial securities.
About Integrum ESG
Integrum ESG is the leading alternative ESG data and ratings platform for investors, blending human analysis and award-winning artificial intelligence models to capture, verify and display granular and relevant ESG data for analysis and assessment. The platform allows clients to dissect ESG scores, real-time sentiment, and more with a variety of unique-to-market features, empowering industry professionals and investors and giving them complete oversight of ESG risk across their portfolio.
The so-called ‘Great Wealth Transfer’ is looming. Over the next thirty years, baby boomers are set to transfer a total of £5.5 trillion to the younger generation, according to research by the Kings Court Trust and Centre for Economics and Business Research.
However, the heirs of this wealth transfer won’t necessarily be sticking with their parents’ advisors. In fact, research by Cerulli has shown that just one in five ‘affluent’ investors use the same advisor as their parents.
Difference in risk appetite
The younger generation also invest differently to their parents.
As of late 2022, 21% of affluent millennials held some cryptocurrency. This compares with 22% of Gen Xers and just 3.6% of baby boomers. Meanwhile, more than half of Gen Z reported owning this asset class.
Younger investors were also far more likely to invest in peer-to-peer lending platforms or crowdfunding. With just under 10% of millennials willing to invest in these ways, compared to just 1% of baby boomers.
Michelmores, who ran the study into this generation gap, noted that though these numbers weren’t necessarily high, they showed that younger generations were more willing to take a risk with their investments.
But risk appetite wasn’t the only thing that set the younger generation apart.
Concern for ethical investing
According to the study, 22% of millennials see ESG as a primary consideration when making an investment decision. This compares with just 6% of baby boomers. Strikingly, over 40% of the older generation reported that “social and environmental impact has never been a consideration” in their investment decisions.
A separate report from the Charities Aid Foundation found that demand for help with their charitable giving was much greater among millionaires aged between 18 and 34. 57% of this age group wanted help with their charitable giving, compared to 49% of those aged 35 to 54 and just 34% among those aged 55 and older.
With such stark differences, it’s no wonder that one in three financial advisers cited client longevity or an aging client base as their biggest concern.
Aaron Gibbs, personal finance commentator at Charles Stanley, said firms will need to adapt their proposition or risk getting “left behind” by the younger generation.
Deloitte warned, however, that trying to be “everything to everyone” is unlikely to yield good results. Instead, the professional services firm suggests “fine-tuning” product, distribution, and pricing strategies to fully meet customer needs.
We’d like to take the opportunity to formally welcome the newest members of the ITL team. Trevor Edwards, Vimal Lalla, and Shamsul Abdin have all recently joined our tax-focused subsidiary, FSL.
We look forward to seeing what the three will achieve as they continue their journey here and support our vision to accelerate the evolution of wealth management 4.0.
Trevor Edwards, Agile Coach
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“I joined FSL in November 2023 as Agile Coach, having carried out the same role for the previous six months as an external consultant.
What made me want to join was the people here – a great team, really welcoming and supportive and keen to embrace changes to their way of working and to give the best service to our customers.”
Prior to joining FSL, Trevor was Principal Assurance Consultant at Acutest. |
Vimal Lalla, Senior Software Developer
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“Having joined FSL in October 2023 as a Senior Software Developer, I was met by a very supportive and welcoming team.
During this short space of time, I have learnt and worked on new technologies. I’m looking forward to adding value and contributing in FSL’s future goals.”
Prior to joining FSL, Vimal was Specialist Developer at the JSE.
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Shamsul Abdin, Corporate Actions Team Lead
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“I’ve been with the company for 3 months and really enjoying it. Super friendly work environment helped me settle in lot quicker. Looking forward to contributing as well as learning as the company continues to expand.”
Prior to joining FSL, Shamsul was Senior Corporate Action Analyst at HSBC.
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Last week, the UK Treasury confirmed that it will regulate environmental, social and governance (ESG) rating providers. The announcement followed a year-long consultation which began in the wake of 2023’s Spring Budget.
The finance ministry said a new regulatory regime would improve “clarity and trust” in the ratings.
The decision was welcomed by the Financial Conduct Authority who said last week it would work to develop a “proportionate and effective” regime focused on “transparency”.
What are ESG ratings?
ESG ratings measure a company’s exposure to environmental, social and governance risks. These can include things like its energy efficiency, worker safety, and board diversity. They are becoming increasingly influential, with the government projecting that $33.9 trillion of global assets under management will consider ESG factors within three years.
Research has also shown that changes in ESG rating can lead to responses in financial markets and firm behaviour. However, rating providers’ methodologies and objectives have often been considered opaque and inconsistent.
Why regulate ratings providers?
In the consultation paper released last year, the Treasury said it saw a “clear benefit” from improving the transparency of methodologies, governance and processes of ESG ratings providers.
“Better ESG ratings would benefit consumers, who are often the end-users of investment products that increasingly rely on ESG ratings. As one of the first jurisdictions planning to introduce such regulation, this provides an opportunity for international leaderships by the UK,” it said.
When will we see the new regulation?
Currently, there is no specific timeline for this ESG rating regulation. However, the Treasury did confirm that a full response consultation response and legislative steps are due “this year.” That being said, a general election in the UK is also expected this year, which may impact the timing of this new regulatory regime.
We firmly believe that strategic collaboration is essential for any industry to transform. As we navigate the path to wealth management 4.0, financial services firms should focus on striking up suitable partnerships to develop their products and services in line with changing needs. Those who ignore the need for collaboration will likely be left behind. This is a topic our Group CEO Nuno Godinho discussed in a recent article for Maddyness, exploring the lessons we can learn from the digital transition in other industries such as healthcare.
At Industrial Thought, we’re committed to fast-tracking the future of wealth management through our investment arm Thought Ventures. We invest in disruptive innovators, some in our realm and others in adjacent markets, all aligning with our values and reinforcing our commitment to creating a socially responsible, sustainable circular economy. Additionally, we are exploring potential acquisitions to keep growing as a group.
Some of our recent investments include:
Sourcing Playground exists to remove uncertainty around the supply chain. It is an innovative intelligence platform that provides brands and retailers with global production insights, industry data and analysis, so they can build strong sourcing strategies and trade with ethically-minded partners. Companies don’t need to spend the time and money visiting factories themselves as the platform presents a comprehensive view of all the relevant information.
For asset management firms and equity researchers, Sourcing Playground lets them assess the ESG track record of factories supplying the major retailers that their clients may wish to invest in. As a result, investment firms can differentiate their service by delivering deeper insights about a company’s ESG credentials from an entire supply chain perspective and personalise investment strategies.
Ammonite builds financial adviser software for pure online engagement, resulting in a broader customer reach, enhanced conversion, and greater operational efficiency. It is evolving the financial planning experience through digital technology and empowering financial advisers with the tools to engage and economically service the next generation of investors. Confident in the power of partnerships, Ammonite understands that this era of digital disruption requires advisers and software providers to work together for everyone’s benefit.
When Nuno spoke with WealthBriefing, he emphasised the importance of building a digital ecosystem in wealth management; this starts with a digital front door that connects all of the investor’s data in one place. Maintaining a customer-centric perspective is only possible when we have a consolidated view of data, leveraging technologies like AI and Machine Learning. Now is the time to put customer experience first and Ammonite is focused on that goal.
The TISA Universal Reporting Network (TURN) is an industry blockchain solution for collecting and disseminating fund-related data. The overall aim is to increase market compliance, reduce regulatory and operational costs, and provide a better service to investors. Essentially, it acts as a central data repository for the asset management industry – an irrefutable ledger that all parties can see and rely on.
Again, as we work towards an open marketplace in wealth management, having a standardised reporting network for shared data is critical to establish provenance and traceability, and protect against liability. We can only build a more sustainable, circular financial future if it’s built on trust.
Finbridge Global is a collaboration platform that has been designed to facilitate faster, more effective partnerships between fintechs and financial institutions. It is the only global platform with a smart assessment engine that can define a fintech’s suitability for FIs, aiding the creation of powerful partnerships. The platform offers a straightforward way of accessing an extensive array of fintech solutions in one space and includes an in-depth evaluation, expediting the Request for Information (RFI) process. It also identifies strengths and weaknesses; where weaknesses emerge, fintechs are provided with a clear path to improvement.
While many FIs see the benefit of collaborating with fintechs, it’s not always easy for them to access the right information. Finbridge Global simplifies that process, allowing organisations to pinpoint providers that align with their preferences and requirements, moving valuable relationships along quicker.
All of these investments reflect our commitment to investing with purpose, fast-tracking innovation for transparency, and driving digital transformation and connection. It’s challenging for fintechs to attract investment in the current market, but at Industrial Thought, our sights remain firmly fixed on finding opportunities to advance our industry. If you would like to discuss potential collaborations, reach out to us here.
London, England, 19 January 2024: Industrial Thought Ltd – a group of companies focused on investment taxation, financial data, and related consultancy services – has announced a £150,000 cash investment in the collaboration platform Finbridge Global. Finbridge will also receive strategic support from Industrial Thought, worth £350,000.
According to 2023 statistics from Deloitte, there are currently around 30,000 fintech start-ups worldwide with a global market value of approximately £252 billion. The UK fintech market is valued at £15.9 billion. Despite the significant opportunities this represents for start-ups, investors, and financial institutions (FIs), it’s challenging to search and compare fintechs based on their capabilities, limiting the number of potential collaborations.
Finbridge Global has been created to bridge this gap. It is the only global platform with a smart assessment engine that can define a fintech’s suitability for FIs, aiding the creation of powerful partnerships. The platform offers a straightforward way of accessing an extensive array of fintech solutions in one space and includes an in-depth evaluation, expediting the Request for Information (RFI) process. It also identifies strengths and weaknesses; where weaknesses emerge, fintechs are provided with a clear path to improvement.
Barbara Gottardi, CEO and Founder of Finbridge Global, explained: “FIs recognise that they can reap major benefits from technology innovators in areas such as operational efficiency and better consumer outcomes. Yet, while most of these organisations are keen to engage fintechs, they struggle to get the information they need to establish trust. Our goal is to simplify the process, promote transparency, and ultimately facilitate progress.
“Working with the right partners is key to achieving positive outcomes, which also applies to our own growth as a technology start-up. The investment from Industrial Thought allows us to cement our positioning, build strategic partnerships, and encourage adoption in the UK, before expanding the platform’s global footprint in 2024. We’re incredibly pleased to work with the team and leverage their expertise.”
Nuno Godinho, Group CEO of Industrial Thought Ltd, added: “Finbridge Global’s commitment to collaboration reflects our firm belief in the power of partnerships to fast-track the future of financial services. The technology behind the platform stands out for its comprehensive capabilities and streamlined approach, and the standardised assessment criteria is a crucial element to build trust.
“As part of our strategic investment approach, we don’t just look at the financial value we can offer, but also the benefits we can add through the support of our shared services and sales channel. We look forward to helping Barbara and her team maximise the platform’s impact in the UK and beyond.”
Finbridge Global hosts a monthly Innovation Board in collaboration with The Investing and Saving Alliance (TISA) to ensure its platform is fully-equipped to meet the sector’s needs. The Innovation Board brings together diverse financial institutions to discuss the changing nature of fintech engagement.
Innovation Board Member John Thompson, from the global investment company abrdn said: “We are pleased to be collaborating with Finbridge Global in tackling some of the industry’s biggest tech innovation challenges. To succeed in an API-led world, FIs must employ increasingly efficient fail fast methods for identifying and evaluating the potential and interoperability of new technologies. Having an effective “match-making” platform will speed up these assessments and make a big difference for further innovation.”
About Industrial Thought Ltd.
Founded in 2013, Industrial Thought Ltd is the parent company for a group of companies in the field of investment taxation, financial data, and related consultancy services. It aims to drive transformation by creating a complete suite of data, platform, and marketplace services to raise standards and accelerate innovation.
Companies within Industrial Thought include:
- Financial Software Ltd (FSL): A provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator.
- Raw Knowledge: A specialist data provider and consultant for the financial services industry.
London, England, 10:30, 8 December 2023: Industrial Thought Ltd. – a group of companies focused on accelerating the future of wealth management – has announced a £250K investment in the pioneering platform TURN (TISA Universal Reporting Network). Developed by The Investing and Saving Alliance (TISA), TURN is an industry blockchain solution for collecting and disseminating fund-related data. The platform represents a major milestone in empowering asset managers, distributors, and the broader financial sector by providing a unified, transparent, and efficient solution for data-related challenges. The aim is to increase market compliance, reduce regulatory and operational costs, and ultimately provide a better service to investors.
Gary Bond, CEO of TURN, said: “We believe that data is the lifeblood of the modern financial world, and it should be harnessed to its full potential. Unlocking that potential starts by overcoming the main obstacles; because TURN has been developed by industry experts for industry professionals, we can tackle those challenges head on. Building on the platform’s initial success, we have a lot of exciting plans in the pipeline. The investment from Industrial Thought enables us to enhance our capabilities further as we continue to address the evolving needs of our industry.”
Nuno Godinho, Group CEO of Industrial Thought Ltd., added: “In this new era of digital transformation, it is crucial to standardise data to create trust, limit liability, and allow our industry to thrive. TURN is doing exceptional work building an environment where firms can share their data and its key principles of transparency, collaboration, cost-effective excellence, and quick to market, totally align with our values.”
Industrial Thought is taking a holistic approach, paving the way for an ecosystem that serves both investors and wealth and asset management professionals. This environment relies on having a trusted financial reporting network like TURN at its core so that stakeholders can share data securely and be confident that the information has been validated.
About Industrial Thought Ltd.
Founded in 2013, Industrial Thought Ltd. is the parent company for a group of companies shaping the future of financial technology and data products. Backed by collective expertise, it is powering the transition to wealth management 4.0 and facilitating a socially responsible, sustainable economy.
As the wealth management industry enters a new era, Industrial Thought will drive transformation by creating a complete suite of data, platform, and marketplace services to support the delivery of higher standards and speed up innovation.
Companies within Industrial Thought include:
- FSL (Financial Software Ltd.): Simplifying the Complexity of Managing Investment Taxes. A provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator.
- Raw Knowledge: Reshaping Wealth by Demystifying Data. A specialist data provider for the wealth management industry.
- Thought Train: Fast-tracking the Digital Leap in Wealth Management. A rapid proof of concept company focused on financial software development.
- Thought Ventures: Investing in Trailblazers to Build a Sustainable Circular Economy. A venture builder and incubator aimed at investing in innovative early-stage to Series A start-ups working towards a more circular economy.
London, England, 07:00, 15 November 2023: Industrial Thought Ltd. – a group of companies focused on accelerating the future of wealth management – has announced a £250K investment in Ammonite, developers of hybrid financial advice technology. This raise comes during a period of significant economic pressures but also a period of rapid transformation for the industry, with financial advisors forced to meet a new wave of digital demands. As a result of the investment, Ammonite can speed up the pace of its development and enable more advisory firms to grow their customer base.
Ammonite builds financial adviser software for pure online engagement, resulting in a broader customer reach, enhanced conversion, and greater operational efficiency. It is evolving the financial planning experience using AI and ML, empowering financial advisers with the tools to engage and economically service a wider market of next-generation investors. Clients can benefit from ready-made solutions or customise their own remote customer and adviser journeys.
Deloitte’s recent Wealth and Asset Management 4.0 report revealed that 40% of clients now say digital access has greater importance in decision-making. And three-quarters of wealth firms believe that investors’ primary engagement channel will be digital within two years.
Rob Harradine, Co-founder of Ammonite, said: “Today’s investors expect fully remote or hybrid interaction. Having worked as financial advisors, we understand industry and investor frustrations. Leveraging the power of technology, we make it easier for advisors to deliver an efficient service and a superior client experience at scale. Industrial Thought’s strategic investment is an exciting step, given our shared vision to drive digital transformation across the financial services industry.”
Nuno Godinho, Group CEO of Industrial Thought Ltd., added: “We are committed to advancing wealth and asset management, not only by building new products, but also by partnering and investing in innovative companies and entrepreneurs who align with our mission to facilitate a socially responsible, sustainable circular economy. Our industry must put clients/investors first by providing a fully personalised customer experience throughout their journey. This needs to be digital-led, which is why the time is right for us to invest in start-ups spearheading this change like Ammonite. Ammonite brings a unique proposition allowing the industry to create connected wealth journeys for any of the wealth pathways chosen.”
Industrial Thought is taking a holistic approach, paving the way for an ecosystem that serves both investors and wealth and asset management professionals. In this environment, stakeholders can see tailored information, compare options, and select best-in-class products, such as Ammonite’s software, at every stage of the investment journey. Data security and transparency is another crucial component of the ecosystem, and Industrial Thought recently announced its investment in the pioneering platform TURN (TISA Universal Reporting Network), an industry blockchain solution for collecting and disseminating fund-related data.
About Industrial Thought Ltd.
Founded in 2013, Industrial Thought Ltd. is the parent company for a group of companies shaping the future of financial technology and data products. Backed by collective expertise, it is powering the transition to wealth management 4.0 and facilitating a socially responsible, sustainable economy.
As the wealth management industry enters a new era, Industrial Thought will drive transformation by creating a complete suite of data, platform, and marketplace services to support the delivery of higher standards and speed up innovation.
Companies within Industrial Thought include:
- FSL (Financial Software Ltd.): Simplifying the Complexity of Managing Investment Taxes. A provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator.
- Raw Knowledge: Reshaping Wealth by Demystifying Data. A specialist data provider for the wealth management industry.
- Thought Train: Fast-tracking the Digital Leap in Wealth Management. A rapid proof of concept company focused on financial software development.
- Thought Ventures: Investing in Trailblazers to Build a Sustainable Circular Economy. A venture builder and incubator aimed at investing in innovative early-stage to Series A start-ups working towards a more circular economy.
Contact us to learn more about innovative solutions for connected wealth journeys and discover how we’re shaping the future of wealth management.
Mike Baker is making a significant impact consulting for ITL as we strategise our next stage of growth. His extensive experience and profound knowledge in the wealth management sector bring a fresh perspective to our strategies. With around 30 years of experience in the wealth management sector, Mike most recently occupied the position of MD for the progressive financial software company FinoComp, part of Bravura. Solutions Group. He has some extremely valuable insights about how industry players can maintain their edge as they adapt to a rapidly changing financial environment. His expertise is proving invaluable as we navigate these evolving challenges and opportunities.
‘My goal is to work with Nuno and the team to streamline the group’s positioning and define and execute its strategy focusing on the wealth management space. This involves not only refining our current offerings but also identifying new avenues for growth and innovation. There are many opportunities to leverage our expertise and evolve cutting-edge products, such as FSL’s CGiX, to be more mass-market capable. By broadening our market reach, we aim to make our advanced solutions accessible to a wider audience, thereby enhancing our impact in the industry. At the same time, we are actively exploring other opportunities and partnerships to expand our capabilities in the marketplace.’ These strategic partnerships will allow us to integrate additional resources and expertise, ensuring we remain at the forefront of the industry.
Overall, Mike Baker’s contributions are driving significant progress and positioning us for sustained success in the wealth management sector.
