Change is coming fast and will be extensive
The survey comes at a time of great industry turmoil as seismic shifts are being accelerated by the COVID-19 pandemic. Our participants, who together manage a combined $5.6trillion AUM, provided valuable insights on the industry outlook to 2025.
Change is coming fast and will be extensive. Private banks and wealth managers might be underestimating the full extent of industry change on the horizon. However, it is surprising that our survey shows that 78 percent of WMs in Europe and Asia believe their current business models will survive through 2025.
Megatrends reshaping client expectations and values
Participants highlighted six megatrends they expect will have the most impact on making their businesses more dynamic and delivering higher client value going forward. Together, these trends will shape further opportunities for the industry to evolve and provide new offerings for the next generation of clients.
In addition to the megatrends, participants identified three fundamental industry changes that require a response:
- Addressing wealth succession outflows: WMs surveyed expect to lose on average one-third (32%) of their clients’ wealth at the point of succession. This outflow is estimated to be $40trillion in investable assets over the next 30 years, or $1.5trillion per annum (p.a.).
- Raising the bar on talent: WMs understand that they need to invest more in attracting and retaining the right talent and change the culture to better serve clients. Most respondents cite talent as a top-three investment priority over the next five years.
- Overcoming business model change inertia: nearly four in five WMs (78%) in Europe and Asia don’t plan to make significant changes to their traditional business models.
However, while many see clouds ahead, surprisingly most participants remain optimistic about the untapped wealth management market opportunity in the short and long term. Clearly, to deliver future value firms must take a much broader view of the market beyond their traditional playground. The prize for doing so is significant, with approximately $260trillion in holistic personal wealth (including non-bankable assets) at play.
The future should be bright for those who can successfully transform by designing a roadmap to deliver their future ambitions, co-creating and delivering at scale and pace.