The future of wealth management
November 16, 2016
A course change looms for all wealth management firms, regardless of size or clientele.
The coming of age of a new type of client, the emergence of new digital technologies such as robo-advice platforms and a plethora of new regulations have completely transformed the face of wealth management. These changes demand a new kind of business model—one that’s built on digitally led hybrid advice, customized for individual investors, and focused on goal-based planning and outcome-oriented investing.
In this report, Accenture examines the five most important trends that are shaping the future of wealth management and explains how wealth management firms can prepare themselves for the course change ahead.
Five trends have converged to create a new wealth management landscape:
1. Competition intensified
Wealth management firms are facing competition not only from pure digital portfolio management platforms like Wealthfront and Betterment, but also non-financial players like Google.
2. Demographics shifted
Millennials are set to surpass Baby Boomers as the largest generation, and women will soon control a larger share of assets than ever before.
3. Client expectations changed
As the share of Millennial investors grow, so do service demand and fee sensitivity. These investors want transparency and control in wealth management and are vocal about their desire for lower fees.
4. Digital technology arrived
Many firms remain skeptical of virtual interactions, but investors overwhelmingly value collaborative relationships enhanced by digital technologies.
5. Regulation increased
Firms are being forced to reconstruct key areas of their businesses to comply with increased regulation concerning fraud prevention, fiduciary responsibility and more.
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Questions to ask
Even if your firm can appreciate and understand the trends that are shaping the new wealth management landscape, your leadership team needs to determine how your organization can and will respond. Start by asking the following questions:
- Who are our new clients and what is our value proposition for them?
- Who are our new competitors and how do we address the threat they pose?
- How must our business change to successfully incorporate a hybrid model?
- How do we shift from product-led to advice-led counsel?
- How can digital technologies help us reduce costs and serve our clients better?
The days of one-to-one product-led advertisement are now as dated as yesterday’s news
Did you know
76%
Of investors don’t believe that digital technology limits face time or reduces the quality of the advisor
Recommendations
There is no one-size-fits-all approach for retooling and reinventing your firm in this new wealth management landscape. Nevertheless, certain principles are clear:
- Develop advice-based experiences that add value.
Loyalty and reward programs, and family education regarding upcoming wealth transfer, are just a few of the ways your firm can add value to standard advisory services. - Explore a hybrid advice model.
Leverage the strengths of your human and machine workforces, encouraging human interaction or self-service where desirable. - Look at key opportunities to digitalize.
Start with quick wins related to onboarding and branch-specific tools used by advisors. - Reorganize around advice, not products.
Encourage collaboration between siloed departments to eliminate cannibalization. - Be sure your advisors reflect the diversity of your customers.
Some firms have found success by sub-segmenting based on language and culture and ensuring advisory team members understand the unique needs of each group.
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