Impact area three:
The sense of financial "wellness" is expected to progressively reshape how wealth is discussed, positioned and measured
The concept of wellness has broad application. Essentially, it’s a condition where people strive to take proactive control of their financial, physical, lifestyle values and mental well-being. The perception of its importance and increased demand for wellness of all kinds has been accelerated because of COVID-19. We believe financial wellness will progressively become more front and center for wealth managers. Education will play an important role also.
NA – Longer lifespans and more complex financial lives contribute to a higher focus on holistic wealth management. Firms have used ventures and partnerships to bolster offerings in insurance, lending and alternative investments that empower advisors. Wellness-led offerings are focused on how endemic matters such as health and eldercare, financial literacy or sustainability matter to client segments and fit into the holistic advice picture.
APAC – Admittedly behind NA and Europe with respect to products, the need for more planning and wellness will become even more critical in APAC as client preferences evolve from transactional to managed accounts, especially considering there are limited social safety nets in many parts of the region. Shared through a digital-first delivery model focused on holistic individual needs and goals, there’s a clear opportunity to capture investors’ hearts and minds. The focus on returns is still front and center for many clients though.
Europe – Insurance companies and asset managers are increasingly trying to morph into wealth managers as financial wellness is gaining traction. Clients are becoming inherently more informed and will increasingly turn to their advisor for tailored and trusted advice around issues beyond traditional portfolio management.
Where we’re going:
Wealth management will likely move from resilience in 2020 to reshaping in 2021 to lay the foundation for reinvention up to 2025
Across NA, APAC and Europe, we now see more convergence in players adopting a new playbook for 2021 and beyond. This would be necessary, as players transform and innovate to become next generation wealth managers dealing with upcoming events such as progressive intergenerational wealth transfers, serving new wealth creators such as entrepreneurs and women, or tapping into ESG and non-investable assets that could further drive the industry’s sustainable growth perspectives up to 2025. Having achieved largely resilient business activity for rapid and tactical remote digital engagement during COVID-19, wealth managers could now progressively move to more strategically reframe, innovate and differentiate their advice propositions as well as their hybrid advisor interaction models (which combine face-to-face with digitally enabled features) this year.
What this could mean for the different markets in 2021:
NA – Firms should continue to innovate on trust with their clients. COVID-19 has proven that quality advice and client interactions can be provisioned remotely, and the pandemic has structurally reset many firms’ advice propositions. Ambitious transformation looks to evolve these propositions for growth in targeted client segments, and requires clear linkages to a differentiated experience, advice and product mix. Technology-led ecosystem plays could be critical enablers, but they should have a clear line of sight to firms’ strategies to provide competitive advantage.
APAC – By taking lessons from some of the big tech players’ ecosystem-type platforms now, instead of losing market share to them tomorrow, wealth management firms should continue to focus on innovation and the use of data to deliver richer client products, solutions and experiences. The explosive growth of leading in-region technology firms makes the environment ripe for learning and engagement partnerships with wealth managers. Topics such as sustainable investing are expected to catch on quickly too and need to be incorporated into product offerings and advisory services.
Europe – By following the region’s product and advice regulations, data privacy, and advanced ESG and impact investing positioning, wealth managers can reframe and invest in digital and cloud technology platform and ecosystem innovations. This could help them lead in responsible wealth management through adopting higher client reporting, disclosure and outcome measurements.
From these new baselines, firms could further reinvent themselves to become data-driven, smarter wealth management organizations that deliver hyper-personalized client solutions―supported by a more liquid workforce. All this change and transformation would be enabled by new technologies such as cloud, AI and advanced data security, allowing players to become trusted and experience-based next generation wealth managers.
Overall, across all regions, 2020 proved the industry’s resilience and its evolving role in societal and environmental trends. 2021 is expected to see greater innovation that is delivered at scale through new enabling technologies. Let’s watch the progress.