The evolution of wealth building in Europe: from traditional private banking to modern financial tools.

In just the last few decades, there has been quite a radical shift across Europe on how to build and preserve wealth.

The traditional bastion of private banking and wealth management-until a few years ago reserved for only the very rich-is now being rapidly replaced with a new set of financial mechanisms designed to allow just about anyone to get in on the ground floor of investment opportunities.

This shift aligns with wider global trends, which encompass technological advancement and regulatory environment changes toward greater financial inclusion and transparency.

The Traditional Model: Private Banking and Wealth Management

Wealth building has traditionally been dominated by private banking and wealth management institutions.

These services are tailor-made for high-net-worth clients and include personalised investment advisory services and tax optimisation. The model thrived on exclusivity-the high barriers to entry of both the minimum investment amount and the socio-economic status of the clients

This is a person-to-client relationship, where the financial advisor is equal to the client in managing his or her portfolios. Both are based on a very high level of strong trust. The model was thereby effective for the preservation and growth of wealth for the affluent classes. However, inherently it was limited to providing access to the other sections of the population for effective management of their wealth.

Democratising Wealth Building With Technology

New platforms have been created with the use of technological innovation to urge more financial involvement from people so that there can be a change in how retail investors participate in the financial markets.

The platforms aim to provide retail investors with all the tools and features that a professional investing advisor would provide to their clients.

If you think about it, wealth management is all about:

Having the right information
Having access to the right investments and financial instruments
Having access to professional investing tools that can give them an edge when it comes to investing

And this is exactly what these investment platforms and apps are offering.
Educational Resources

Today, financial literacy is increasingly becoming recognised as a tool that is vital for individual financial success.

These days, many online platforms provide educational content to users who start from basic budgeting techniques to advanced investment strategies using mobile apps and interactive tools.

And so, this explosion of knowledge helps to pull back the veil of mystery on complex financial products and markets and makes wealth building something more manageable for all.

Investment Platforms

The democratisation of financial services has largely been supported by the emergence and growing popularity of digital investment platforms. These are, in a simple way, investing interfaces that enable guided investment, fractional ownership, and even automated portfolio management.

In addition, the platforms help reduce the financial entry barriers that in the past have seen investment as a reserve for the rich since investors can start with low amounts of capital. Such platforms usually have educational tools that are part of their investment processes, meaning they help the user understand and make the investment more engaging.

Innovating the Savings Process

Innovations in savings make an impact, especially in the current high-inflation - high-rate environment. With modern technologies, there is an ability to have a savings plan in such a way that a user can instantly transfer their money into a high AER savings account without hassle.

Earning a high interest rate on your savings used to be much more difficult or even unattainable but today's investing apps offer access to Money Market Funds, with very competitive rates against traditional banks.

The Automation and Fractional Investment Revolution

The rise of robo-advisors and fractional investments has further democratised the space. Robo-advisors are platforms that provide automated, algorithm-driven financial planning services with little with no human supervision. In other words, sophisticated portfolio management is now available en masse at a fraction of the cost compared to the old style, human-produced kinds.

This allows even the individual investor to buy into expensive assets like stocks, bonds, or real estate at a fraction of the full cost, hence allowing diversification of the portfolios without the initial large investment. Investment platforms and apps have redefined the game of investing for retail and small investors, bringing investment opportunities, reducing costs, and making available educational resources that were out of reach for the common man in the past.

This change has been occurring bit by bit within the past 20 years, with some measures hastened by the technological environment and changes in the regulatory framework.

Changes that Investment Platforms and Apps have Brought

Democratisation of Investment Opportunities

In the pre-digital investment platform era, the market was, for the most part, limited to people who could afford to make massive capital investments and had the expertise that was required for them to invest and make it in the first place.

However, contemporary investment applications and platforms have made it possible for the wider public to access the financial markets. These companies offer investment options with very low starting capital, sometimes even just a few dollars, and allow buying fractional shares. This means that an investor can acquire a part of a single share of stock or an ETF.
Cost savings

Traditional investing, through brokers, had normally some steep costs attached to it in the form of management charges, transaction fees, and sometimes performance fees.

All these are greatly reduced in new platforms to zero or very little, utilising technology by streamlining many processes. This automation has tremendously brought down the cost to the user, as well as the minimum initial investment required to get started, and now makes the platforms scalable, serving more customers efficiently.

Informed Decision Making

Investment platforms and apps normally come with inbuilt tools and resources that enable the users to make informed decisions.

A great example of a modern investing app is Wealthyhood, which enables investing with real-time market data, analytic tools, and even stats like max drawdown to your portfolio, risk assessment, and projected returns overall multiple timeframes.

It even offers tools that hedge funds and professional traders use like real-time portfolio backtesting and Monte Carlo future simulations.

With automated portfolio rebalancing and automatic portfolio buying at regular intervals, it also makes DCA a piece of cake for everyone.

Pair that with commission-free investing, and you have to wonder why anyone - who is not a high net-worth individual would turn to investment banking instead of using an app.

Such features democratise the ability for even a novice investor to learn and make decisions based on data that was once available only to professionals.
Customisation and Personalisation

Many digital platforms offer algorithm-driven, specific advice regarding customised investment, in which an individual should invest based on the financial goal, attitude toward risk, and investment horizon.

To use the previous example, an app like Wealthyhood can help anyone personalise their investing based on their risk tolerance and the sectors they prefer.

All these used to be features that only high-end investment firms offered their rich clientele but today everyone can truly access them through a DIY investing platform.

Timeline of the Evolution

Early 2000s: The Roots

In the early 2000s, some of these online brokerages began threatening the traditional broker-dealers with their simplified, web-based offerings. E*TRADE and Scottrade, if not spearheaded, at least heralded the whole idea of online trading during those times.

Late 2000s to early 2010s: expansion and mobile adoption

By the late 2000s and early 2010s, the space was entering with more companies, and with the coming of smartphones, mobile trading apps started making an entry. The apps facilitated stock price checking, trading, and access to financial news from virtually any place.

Mid-2010s: Rise of Robo-Advisors

The mid-2010s witnessed the advent of robo-advisors such as Betterment and Wealthfront in the US and Nutmeg in the UK, which automated investment management, using algorithms in creating and managing a portfolio to greatly cut down on the cost of obtaining semi-personalised investment advice.

2020: Technology Improvements and Advanced Investing Accessible to Everyone

The more time passes, the more demand increases, the better investment platforms become.

In the 2020s, apps like Wealthyhood, WeBull, or even eToro are revolutionising the market because they offer commission-free trades along with advanced professional investing tools something that aim to protect and grow an individual's wealth.

The COVID-19 pandemic has only further helped the use of these platforms since many more people have been attracted to trading and investing with the help of easy and accessible apps.

Overall, the platforms and applications that were developed for investment just lowered the entry barriers, not only for retail but also for small investors. Today, they offer individuals an even higher level of control in determining their financial future.

This has also been possible due to the changes in the regulation. European Regulatory Bodies have been leading with increasing financial transparency and consumer protection, fostering services that offer simplicity and security for the investor. This regulatory environment has been very key to fostering innovation in the financial sector and encouraging firms to create solutions that meet these new standards.

Wrap Up

The change in wealth building reflects a large movement towards making investing accessible to everyone.

Gone are the days when the said industry still used the traditional model.

That sort of approach still survives in some small corner today, but it is only a small part of a much wider spectrum that offers flexibility, and user-friendliness of the financial tools in an affordable way.

These innovations, as they further develop with time, promise to redefine how European citizens will be able to increase their wealth.

This shift is not only able to enhance financial empowerment at an individual level but also is empowered to impact wider economic stability and growth. And this can lead to an investment-savvy population that will be able to contribute towards a strong economic environment.

Wealthyhood
9 Kingsland Road, London, United Kingdom
Contact Name: George Fakorellis, george@wealthyhood.com
Press Contact: hello@wealthyhood.com

Wealthyhood is a dynamic financial and investing platform dedicated to transforming the way individuals approach wealth management and investment. By blending advanced technology with expert financial advice, Wealthyhood creates a unique, user-centric experience that empowers people to take control of their financial future.

At its core, Wealthyhood offers personalized financial planning, crafting strategies based on individual goals, risk tolerance, and investment preferences. This bespoke approach ensures that every user receives a financial plan tailored to their specific needs and aspirations. The platform provides access to a diverse range of investment opportunities, including stocks, bonds, real estate, and alternative assets. Users can build and manage diversified portfolios designed to optimize returns while effectively managing risk.

Education is a cornerstone of Wealthyhood's philosophy. The platform offers a wealth of educational resources, helping users enhance their financial literacy and make informed investment decisions. With Wealthyhood, financial knowledge and opportunities are democratized, enabling everyone to participate in wealth creation and achieve their financial dreams.

This release was published on openPR.