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Here Are the Top Trends Currently Reshaping Wealth Management

The wealth management industry is undergoing a facelift.

Posted: 22nd March 2019 by
Finance Monthly
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While many traditional methods and procedures are still in play, firms are adopting modern and innovative strategies to draw in a hipper and younger, yet more demanding, clientele.

From new technologies to fresher approaches to client service, here are the top trends that are sweeping and changing wealth management today.

A Digital Industry

2018 witnessed a firm-wide and strategic digitalization of wealth management companies. The trend continues to this day as big and small firms reshape the different aspects of their business to embody the change.

As the industry prepares for a generation of younger and tech-savvy clientele, integrating digital strategies to their marketing efforts and creating more efficient client-advisor interaction channels become essential.

Firms that have already taken the lead in implementing a centralized digital management strategy are raising the bar and driving competitors to do the same.

In the words of FinTech Advisor and ASEAN/India Retail Banking and Wealth Management Expert, Arvind Sankaran, “We are witnessing the creative destruction of financial services, rearranging itself around the consumer. Who does this in the most relevant, exciting way using data and digital, wins!”

Sustainable Investing Is Here To Stay

The Institute for Sustainable Investing’s 2017 “Sustainable Signals" report showed that there is a growing interest in sustainable investing and the adoption of its principles among investors. What's even more interesting is that millennials are taking charge.

Millennials take sustainable to the center stage as they search for more socially and environmentally conscious investment opportunities.

This increasing demand for sustainable ventures will continue to push wealth managers to take impact investing more seriously. Thus, the next years may see financial advisors incorporating the environmental, social, and government (ESG) philosophy into their services and financial planning approaches.

The Rise of AI and Robo-Advisors

Taking into account the millennials’ fascination with anything technologically-inclined, it’s not at all surprising that the idea of Robo-Advisors resonated and connected with young investors quite well.

In a statement, the automated investment service firm, Wealthfront, commended the ability of software-based solutions in delivering investment management services at a “much lower cost than traditional investment management services.”

While it can be argued that Robo-advisors can never replace competent human financial advisors in terms of creating customized long term investments or tax and retirements plans, the competition between automated and human advisors have benefited the clientele. For one, it drove the costs asset management down. More importantly, it forced financial planners to step up their game and prove their worth.

Basing on current trends, digital assistants (Robo-advisors, chatbots, and other forms of AI interactions) will continue to play a significant role in empowering client-advisor experience. We might be looking at a future where AI becomes a fundamental element in crafting large-scale hybrid advice offerings.

A Focus on Customer Experience

2018’s World Wealth Report identified that many clients think the relationship they have with their financial advisors and wealth managers falls short of their expectations and can use some improvement.

This is clearly a heads up for advisors and managers out there. In the wealth management industry, customer experience holds great weight for clients. For most investors, client-advisor relationships are critical because they believe in their in-depth implications on the realization of financial and life goals.

These days, investors are gradually witnessing moves towards better customer satisfaction as wealth management companies embrace automation and hybrid models of financial management, and re-engineer their strategies to satisfy demands and ensure that customers have the best possible experience during interactions.

With the new breed of investors putting a prime on user experience and opening themselves to the possibility of switching to other wealth management providers if their expectations aren’t met, the best way forward is to innovate and shift to strategies that put the client and their needs at the core.

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