Is WealthTech the New FinTech?

Matthew Goldman is a regular contributor to TWIF Signals, the Founder of Totavi, a boutique fintech product & marketing consulting firm, and the publisher of CardsFTW.

Over the past two decades, fintech has transformed the way we access financial services. The early 2000s saw a major shift in consumer finance, particularly in how people gained access to credit and diversified investment products like exchange-traded funds (ETFs). 

Historically, ETFs were primarily available to institutional investors or high-net-worth individuals due to the high costs of entry. However, the rise of fintech platforms like Betterment and Wealthfront allowed everyday consumers to easily invest in ETF portfolios, opening up access to diversified, low-cost investment options. Peer-to-peer (P2P) lending platforms, online banks, and payment solutions like Lending Club and PayPal also changed the landscape by offering consumers—many of whom were previously unbanked or underserved—new avenues to access credit.

Fast forward to the 2020s, and fintech is once again leading the charge, but this time, the focus has shifted from credit to wealth management. A new wave of platforms and tools, such as robo-advisors and fractional shares, are democratizing access to sophisticated investment strategies that were once reserved for high-net-worth individuals. My hypothesis is that over the next 5 years, the phrase “wealthtech” is going to surpass “fintech” in popularity.

In the early to mid 2000s, “financial inclusion” became ubiquitous as a focus area of fintech. Platforms like PayPal, Lending Club, and Square built a new ecosystem where people could get credit and payment solutions much more easily. P2P lending, for instance, allowed people to borrow directly from other individuals, cutting out banks entirely. This was a game changer, particularly for small businesses and underserved communities.

The impact was significant. By 2019, TransUnion estimated that fintech lenders originated about 38% of all unsecured personal loans. In 2013, that figure was just 5%. In 2021, the World Bank reported that in a span of 10 years, the unbanked population decreased by 35%, and 1.2 billion previously unbanked adults gained access to financial services. This was primarily driven by increasing access to mobile banking technology.

More people have access to credit; so what? Access to credit is really the first step towards other investment opportunities. With reliable credit options, people can handle short-term financial needs without dipping into their savings or investments, allowing them to maintain and grow their portfolios over time. 

As people build their credit scores, they open the door to better financial opportunities, like getting higher limits on investment platforms or more favorable terms. This shift makes it easier for them to grow their wealth. With access to credit, individuals can move beyond just covering daily expenses, focusing on long-term financial goals, and building a more secure future.

Now that a higher percentage of the population has access to credit, and more of an ability to invest excess funds, it’s only natural that there will be increased demand of financial advisory services. Historically, sophisticated investment strategies were only available to those who could afford expensive financial advisors. But now, robo-advisors are making it easy for everyday people to access these tools, offering automated investment management at a fraction of the cost. Not to mention Millennial and Gen-Z users often prefer leveraging tech tools to make their own financial decisions vs. relying on conversations with an actual human being.

Fortune Business Insights reported that the global wealth management platform market size is projected to reach $6.29 billion by 2029, up 165% from $2.37 billion in 2021. Companies like Wealthfront and Betterment are leading the way, bringing sophisticated financial strategies to millions of people who previously wouldn’t have had access to them.

Another major fintech innovation is the rise of fractional shares. Platforms like Robinhood and Stash. Don’t have $216 to buy an entire Apple share? Well, you can own a fraction of one for just $10. 

Since 2019, almost 5 million first-time investors have entered the stock market through these platforms, lowering the entry barrier for retail investors. At one time, startups like Stockpile marketed fractional shares as a major part of their differentiation; today it is common across many platforms.

We’re also seeing a boom in alternative investment platforms. In the past, alternative assets such as real estate and fine art were only available to institutional investors or the ultra-wealthy. Now, platforms like Fundrise and Masterworks are making it possible for everyday people to get a piece of these markets. Fundrise reportedly now has over $3.3 billion in assets under management, and Masterworks reportedly had almost $1 billion in assets under management as of April 2024. You can even buy rare wines via companies like Vinovest.

The democratization of wealth management has huge implications. On one hand, it offers millions of middle-income earners the chance to grow their wealth by accessing investment strategies that were once out of reach. 

But there’s a flip side: will this trend actually help reduce wealth inequality, or could it widen the gap? While more people than ever can access financial markets, data shows that the wealthiest 10% of Americans now hold about 93% of all U.S. household stock market wealth. So, is wealthtech truly democratizing wealth management for everyone, or just making it easier for those already financially savvy?

There’s also the issue of risk. Retail investors are diving into increasingly volatile markets, often without the financial literacy needed to handle complex strategies. In response, regulators are stepping in to protect these new investors. After events like the GameStop stock surge, authorities are paying closer attention to how fintech platforms manage risk and safeguard consumers.

While we’re still in the early stages of democratizing wealth management, the potential is massive. It would be a pretty different world for Average Joes to be able to access investments run by funds like Bridgewater or Point72. Over the next decade, I expect to see even more innovation, with platforms becoming more personalized and using AI to tailor investments to individual goals.

If fintech companies can find the right balance between accessibility and responsibility—and educate retail investors along the way—wealth management could truly become inclusive. Fintech has already transformed credit access, and now it’s turning its attention to wealth-building. The possibilities are incredibly exciting.