Paolo Sironi - FinTech Innovation: From Robo-Advisors to Goal Based Investing and Gamification

The wealth management industry is being redefined as we speak. While robo-advice will drastically change how financial institutions serve mass-affluent clients, goals-based wealth management is becoming the golden standard for high-net-worth firms. Paolo Sironi's book provides a holistic and comprehensive look at these complex industry changes.

Alois Pirker, Research Director, Aite Group

FinTech Innovation is a FinTech survival guide for anybody who manages, invests or saves money. Disruption in Asset Management is coming fast and this book highlights how to benefit from innovation such as Robo-Advisory and Goal Based Investing. This is a must-read book by Paolo Sironi, a global FinTech Thought Leader!

Susanne Chishti, CEO, FINTECH Circle; Chairman, FINTECH Circle Innovate; Co-Editor, The FINTECH Book

This is a thoughtful and superbly executed look at how financial technology has brought welcome changes to the world of investment management. This is essential reading not only for next generation investors but all investors who want to fully understand how money -their money -will be managed going forward.

Mark Landis, Founding Partner, Wavelength Capital Management LLC

Paolo Sironi succinctly captures FinTech's role in the escalating disintermediation of the Wealth Management industry, while offering a logical rationale for what may lie directly ahead. The convergence of investment advice and planning via potential real-life simulations will create a new path for Global Wealth Managers. Goal Based Investing may very well offer regulatory and revenue solutions for a rapidly changing industry.

Mark Cipollina, Executive Director, Head of Investment Advisory UK, Standard Chartered Bank

This book presents a bold new vision on Fintech and Goal Based Investing! Just in time for the largest wealth transfer in history. Goal Based Investing and FinTech solutions are in the minds of every millennial and baby boomer who is millennially-minded.

April Rudin, CEO/Founder, The Rudin Group

It's simple. If you want to know what the future holds for wealth management, ask Paolo Sironi. His latest book presents a personal vision of financial advice that all market participants must heed to stay relevant, and ultimately to stay in business.

Aki Ranin, FinTech blogger and Entrepreneur

This book presents a masterly account of the shifts in the digitalization of financial services and wealth management seen from the perspective of a bank, advisor and investor.

Anthony Christodoulou, Founder, Wealthtrack Robo-Investing Europe

Paolo Sironi takes us beyond the hype to remind us that FinTech Innovation is about customer outcomes. This book provides insights on how quantitative finance and digital technologies can be combined to change the way the wealth management industry can help consumers achieve their goals.

Stephen Huppert, Partner, Deloitte Consulting

Paolo Sironi's book courageously addresses a transformation that is just starting to happen. Before the dust settles, he captures the essence of the shift from plain vanilla auto-investing to the next generation. He offers a qualitative and quantitative framework that can address the issue holistically: Goal Based Investing with Gamification elements. A strategic solution that Sironi examines from both sides of the spectrum: the financial services provider and the end-user point of view.

Efi Pylarinou, Founding Partner, Daily Fintech

This edition first published 2016

2016 John Wiley & Sons, Ltd

Registered office

John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom

For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be sought.

Library of Congress Cataloging-in-Publication Data

Names: Sironi, Paolo, author.

Title: Financial innovation: from robo-advisors to goals-based investing and gamification / Paolo Sironi.

Description: Chichester, West Sussex, UK: Wiley, 2016. | Series: The Wiley finance series | Includes bibliographical references and index.

Identifiers: LCCN 2016011452| ISBN 9781119226987 (hardback) | ISBN 9781119227182 (epub)

Subjects: LCSH: Financial services industryTechnological innovations. | FinanceTechnological innovations. | Financial engineering. | BISAC: BUSINESS & ECONOMICS / Finance.

Classification: LCC HG173 .S54 2016 | DDC 332.6dc23 LC record available at https://lccn.loc.gov/2016011452

A catalogue record for this book is available from the British Library.

ISBN 978-1-119-22698-7 (hardback) ISBN 978-1-119-22719-9 (ebk)
ISBN 978-1-119-22718-2 (ebk) ISBN 978-1-119-22720-5 (obk)

Cover design: Wiley

Cover image: Charts image: (c) Sergey Nivens/Shutterstock; Plant image: (c) Romolo Tavani/Shutterstock

To my champion and the beloved creatures of my family

So far, most of my professional life has been spent at the intersection between FINance and TECHnology, whose line of separation has recently been blurred by financial technology companies (FinTechs). The forces that are fostering their innovative mindset are unveiled in this book, which closely scrutinizes the revolution occurring in the wealth management industry, and particularly digital advice, personalized investing, and cognitive analytics being used to give insight into the behaviour of customers. The findings are based partially on market research and academic material, but mostly on what I owe to the hundreds of business conversations with industry leaders, innovators, entrepreneurs and colleagues. They have enriched this book, transformed any business travel that I have undertaken into a scholarly opportunity, and ultimately made my humble career, which started in risk management, an invaluable journey. Back in the 1990s, I learned to implement advanced quantitative methods to manage trading risks and I engaged periodically with top managers and regulators in search of graphical yet robust simulation methods to turn complex mathematical equations into intuitive reporting. When the wind of innovation blew at my door in the early days of the FinTech revolution, I was easily led on an entrepreneurial journey, it was my goal to change the investment experience as it existed between financial advisors and their respective clients, to allow them to speak more comfortably the intuitive language of Goal Based Investing (whose quantitative foundations are demonstrated in my previous book