A Shift Reshaping Wealth Management
The European wealth management industry is undergoing a profound transformation. For decades, advisory services appeared “free” to clients, since banks and distributors were compensated through retrocessions on the products they sold. But this model is being challenged. The European Commission’s Retail Investment Strategy is pushing for greater transparency and the elimination of conflicts of interest — a path already taken by the UK and the US, where retrocessions are banned and advisory fees are paid directly by clients.
This shift makes one thing clear: the future of wealth management lies in sustainable, transparent fee-based advisory models. Yet, a critical challenge arises — clients will not pay for a service that looks identical to the one they previously received at no cost.
The Challenge: Differentiating Paid Advisory
For fee-based advisory to succeed, it must deliver more value: higher quality, better timing, and true personalization. This is the essence of what the industry now calls “evolved advisory.” Here, technology — and in particular artificial intelligence — plays a pivotal role. By automating complex processes, AI makes it possible to offer a service that is not only scalable but also truly tailored to the needs and preferences of each client.
The Solution: AI as a Silent Partner
This is where Sphere, MDOTM’s AI-driven investment platform, comes into play. Seamlessly integrated into banks’ or networks’ existing systems, Sphere enhances the entire advisory cycle behind the scenes. Its Portfolio Studio module automates the generation of customized portfolios, ensuring they reflect investment committee views, client constraints, and individual risk profiles. At the same time, StoryFolio translates those complex investment decisions into clear, personalized reports and commentaries that strengthen client trust and engagement.
The result is a service that looks and feels fundamentally different from traditional advisory: scalable, personalized, and transparent — qualities that make the transition to a fee-based model not only acceptable but desirable for clients.
Why It Matters
Imagine a large bank or advisor network managing hundreds of client portfolios. Each must adhere to house strategy, regulatory requirements, and individual client preferences — while also being explained in simple, credible terms. Doing this manually is resource-heavy, error-prone, and slow. With AI, however, proposals and commentaries are automatically generated, aligned with strategy, and ready to be shared with clients — freeing up advisors to focus on relationships rather than operational tasks.
From Obligation to Opportunity
What might seem like a regulatory obligation — the end of retrocessions and the move toward fee-based advisory — is, in fact, an opportunity to reimagine the client experience. By embedding AI into their workflows, banks and advisors can deliver a level of personalization, transparency, and efficiency that clients are willing to pay for.
The future of advisory will not be about charging for what was once free. It will be about creating a premium, evolved service that transforms advisory from a commodity into a differentiator — and in that journey, AI will be the essential partner.
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