Global wealth managers must bolster digital channels and invest in financial planning resources to take advantage of opportunities to expand managed assets, according to latest research.
Intergenerational transfers will offer wealth managers significant opportunities to boost assets they oversee, as inheritors seek new firms to steward their wealth effectively, according to findings from Acuity Knowledge Partners, a business intelligence provider for the financial sector.
Amid ongoing global economic turbulence, wealth managers are once again taking the lead in adapting to evolving client and market dynamics, reaffirming their pivotal role in the financial landscape, according to the study.
Among the opportunities for global wealth managers identified in the report, Acuity points to the increasing control of wealth by women, as a notable trend which the industry must address.
With McKinsey predicting American women are on track to oversee $30tn by the end of 2030, benefiting from the ‘great wealth transfer’, Acuity anticipates a similar trend across Europe and Asia. This underscores the growing need for wealth managers to tailor offerings to this expanding demographic, as women increasingly inherit wealth from fathers or husbands.
Digital relationships
Relationships with these target cohorts are increasingly digital, with investment by wealth managers into new technologies having accelerated during the Covid-19 pandemic.
The growing tech-savviness of the younger generation of clients means wealth managers need to adapt. According to the study, the cost outlook for global firms is shaped by two factors: digitalisation and expansion into new markets. More investments will flow into digital tools and platforms to improve client experience and cut costs, according to the research.
“We are on the verge of a fundamental shift in the toolkit available to wealth managers with the adoption of AI technology that supports human advice,” says Vinay Nair, founder and chief executive of Tifin, a fintech platform that uses AI and investment intelligence to personalise wealth.
AI is a general-purpose technology that will become “further verticalised” into “specific solutions that address a broad spectrum of needs,” he believes, comparing the forthcoming stage of the digital revolution to the previous one, where advances in application of the internet led to “vertical SaaS solutions” for portfolio rebalancing, custody, CRM, and risk analysis.
“AI will bring a series of vertically focused co-pilots and agents to support an advisory firm and become commonplace in the next three to five years,” suggests Mr Nair. “This will allow these firms to provide better advice, even as they take on more clients, and drive organic growth without additional headcount.”
The Acuity Knowledge Partners study adds that global wealth managers believe financial planning (37 per cent), retirement planning (27 per cent), estate planning (21 per cent), and investment management (15 per cent) are the main areas with potential for AuM growth in coming years.
Asian expansion
Looking to the future, wealth managers are actively pursuing expansion into developing markets, with a particular focus on Asia. This strategic move is aimed at capitalising on expanding wealth pools across the region. According to BCG’s Global Wealth Report 2023, wealth in Asia is projected to grow at an annual rate of 7.8 per cent, outpacing the global average of 3.8 per cent.
These projections suggest Hong Kong is set to surpass Switzerland as the world’s wealth hub by 2025. In response, global wealth managers are bolstering Asian presence by establishing their own offices or forming partnerships with local players.
