The latest Wealth Management Report published on
The Sunday Times gives plenty of food for thought around the changes happening in the management of wealth and on the current approaches and trends to investing.

Wealth management has traditionally been the preserve of high and ultra high net worth individuals, but the rise of mass affluent clients and the generational wealth transfer to digitally native investors is giving traditional wealth managers a hard time.

Furthermore, digitalisation is opening up the market. From robo-advisers to trading apps, a myriad of solutions promise to democratise investing, and to provide the same, or better, outcomes than incumbent wealth firms.

The Wild West of investing

Digital self-directed investment platforms have been rising in a market that is traditionally perceived as requiring specialised knowledge and a huge starting capital. Combine this with the coronavirus pandemic, and we’ve seen a sharp increase in activity. As defined in the report, “it’s the Wild West of investing”.

The Financial Conduct Authority (FCA) warns that self-directed investors encouraged by the accessibility of investment apps and “investing in high-risk, high-return types, tend to have a high degree of confidence and claimed knowledge. However, the reality of their behaviours and beliefs around investing indicate that this can be misplaced.”

All about the customer

The pandemic was a wake-up call for traditional wealth managers, which are rediscovering the imperative of customer centricity, both for attracting younger investors and for retaining the existing ones.

Onboarding remains a challenge for most firms. In our article on The Sunday Times Wealth Management Report, we mention a Gartner study in which only 26% of advisers said automated client onboarding was available at their firm, and just 14% were actually utilising it. Despite the low adoption, 87% of advisers using the technology ranked it as effective.

Wealth preservation and growth, made sustainable

Erosion of margins and fierce competition from digital disruptors have increased also the interest in alternative asset classes. Sustainability is no longer a fringe concept. Clients demand has placed ESG investing centre stage, though wealth managers are yet to fully embrace it, as shown in our recent survey report.

In a broader sense, making wealth management sustainable also means filling the “advice gap” that a wealth of researches have noted: people who have received advice feel more confident about their finances and have increased mental wellbeing.

Technology is proving it helps keeping pace with business evolution. But as always, picking the right wealthtech partner is crucial.

The full article published on The Sunday Times is available here for download.