6 Trends Reshaping the Wealth Industry

The wealth industry has reached an inflection point in the wake of the pandemic, as investor attitudes, behaviors and expectations have changed dramatically, according to a study released this week by ThoughtLab Group, a thought leadership firm. 

“In our many years of conducting wealth management research, these investor shifts are the most dramatic seen,” Louis Celi, ThoughtLab’s founder and chief executive, said in a statement. “Investor shifts that would have taken years to play out are happening in months.” 

The study, which was completed in November, is based on a global survey of 2,325 investors across age and wealth levels, and a cross-regional survey of 500 wealth and asset management firms.

Adapting to New Expectations 

According to the study, wealth and asset management firms will need to shift from a product- to a client-centric approach in order to succeed in this marketplace, focusing on the person, not the demographic. 

That will require them to reimagine their client segmentation and go-to-market strategies, as well as their range of products, services and pricing models. 

Efforts are well underway. About two-thirds of providers plan to offer alternatives over the next two years in response to investor demand, and 4 in 10 will offer private placements or venture capital opportunities packaged for a wider range of clients. 

On the services side, more than half of firms plan to offer goals-based planning; as a result, they will also add more ancillary financial-related services. 

The ThoughtLab study further indicated that firms will need to shift their digital transformation programs into high gear, while finding the ideal calibration between a high-tech and high-touch approach. 

That balance is critical because contrary to the myth that millennials want to do things only digitally, young investors want personal contact when investing, just like older investors: 46% prefer face-to-face meetings, and 40% want phone calls. 

The research shows that firms that embrace digital transformation on average increase their productivity by 13.8%, their assets under management by 8.1% and their revenue by 7.7%. 

“Our study shows that wealth management providers will need to act now to address fast-changing investor expectations,” Celi said. “The winners in the next wealth management era will be those that think outside of traditional investor definitions and create a rich range of products and advisory services, democratized and priced for a wider group of investors.” 

 

This article was written by Michael S. Fischer from ThinkAdvisor and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.