Finance January 1, 2019 Last updated January 1st, 2019 1,939 Reads share

A Look at the Future of Wealth Management

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Over the past decades, the wealth management industry has seen very few changes in the way it operates and does business with people. However, the role of technology becomes bigger and bigger each day, and investment institutions are left with little choice but to adapt to the change. Evolution is a constant, and in order to thrive, we have to find our feet in its midst.


In a decade or so, millennials are expected to command the more significant percentage of global assets. The challenge for the financial services industry, then, is to come up with effective strategies to earn the trust and keep engaging the next generation of wealth. The industry is bound to experience both an evolution and a revolution in the coming years. Evidently, the change will call for the development of new business models, one that’s more interactive and rooted in technology.


As baby boomers transfer most of their fortunes to their successors, these trends will play a massive part in shaping the future of wealth management:


Shift in demographics

Right now, baby boomers control a large chunk of the world’s wealth, but it’s only a matter of time before they start transferring the assets to the succeeding generation.


As the time of traditional investors comes to a close, millennials inherit more assets and acquire a wealth of their own. The wealth management industry will be compelled to adjust and innovate the way they operate to cater to a much younger clientele.


Investment companies and financial advisors have to embrace a digital makeover of sorts and look into more client-centric models of doing business to successfully bridge the gap and better accommodate the demands of the technologically-savvy client base of the future.


Higher client expectations

People are becoming better-versed with the concept and workings of the industry, which also means that they will want more comprehensive approaches to financial planning – most probably something that allows them to become more involved in the handling of their assets.


The ongoing shift in demographics brings new and higher expectations to the fore. Today’s population of investors are outspoken with their demand for transparency and more hands-on control of their assets. Also, as we are living at a time where the earning power of women continues to rise dramatically, wealth management firms have to prepare themselves for a new breed of investors – the career-minded women.



Goal-oriented investments

To continue drawing people into the world of asset management and financial services, the industry has to conceptualize more goal-oriented approaches to investing. In a few more years, conventional investment schemes might not be able to capture the interest of the newer customer base. Wealth managers will have to sell outcomes instead of products and services. Compared to mutual funds, outcome-oriented investing encompasses different forms of investments that generate cash flow or appreciate over time.


Digitalization of services

We are living in an age where smartphones and applications have virtually made almost every aspect of our lives easier, faster, and more convenient. Investment companies have to recognize that consumers are constantly seeking more mobile solutions to their wealth management needs. Clients are expecting them to run with the times.


The transition of some aspects of wealth management from analog to digital has greatly improved the efficiency of their services, but there’s still so much work to do. People are looking forward to a time where technology would allow them to access information 24/7 and manage the more tedious facets of their investments without having to go to an office.


With the adaptation of Robo-advisors, we may find ourselves in a future where lesser human interaction is needed to answer queries and facilitate transactions. As for now, however, Robo-advisors still have a long way to go before they can fully qualify as replacements for human counseling services.


More integrated financial life

One of the biggest frustrations for many investors is how they have to utilize different firms and consult different advisors for their various financial ventures. It’s usually a separate firm for a specific investment – one for retirement funds, another for property assets, and so on. From a consumer’s standpoint, this can be such a hassle. Having most, if not all, of your assets managed in one place is a more attractive idea.


Currently, some firms are starting to offer more integrated wealth management approaches. They are combining conventional financial planning with asset and real estate management services. Incorporating the diverse aspects does not only make it more convenient for the client but reduces their tax and investment costs as well.


Increased transparency

Lack of trust and transparency is an issue that has plagued the financial services industry for so long, and the wealth management firms even more so. Many investment companies have sustained considerable losses as more of their clients developed misgivings and pulled out assets and mutual funds.


Moving forward, there’s no better way for wealth management companies to regain their credibility and the trust of future investors than to develop more transparent models that promote investor empowerment. A good example of this is the SMA or Separately Managed Account, an ideal alternative to mutual funds because it comes with the benefit of customized portfolio management, which provides greater transparency between the two parties involved.


A better understanding of wealth management

Wealth management was not very popular in the past few decades because people have a minimal understanding of its purpose and benefits. What’s exciting is that things are changing rapidly. As educational resources on wealth management become widely available on different platforms, ordinary people gain access and are gradually introduced to the advantages and rewards of capitalizing on their financial health. Over the past couple of years, e-books, videos, and the Internet, in general, have contributed to building awareness around the value of investing and managing one’s assets.


Technology will continue playing a vital role in creating a well-informed client base for the wealth management industry. There is a good chance for us to find ourselves in a future where people proactively engage in efforts to handle their assets better and gain a much deeper concern for their finances.

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