The greatest wave of Investment Democratisation

Demographics are changing in Wealth Management, and the investment community is becoming more diverse, with younger investors entering the market. Digital access is no longer defined by age or wealth status, and this is having a strong impact on the industry, that is forced to move faster to avoid losing market share and missing the opportunity to capitalise on a dynamic, digital transformation.

ESG, still knocking at the door of Wealth Management

It comes with no surprise that responsible investing is still at the forefront of clients’ demands in 2022, increasingly climbing the rankings of the Wealth Management agenda to be consolidated as a top prerogative for the years ahead. The pandemic has contributed to emphasise the interest in sustainability as a major growth driver and made people and clients of all sorts realise that threats could effectively take shape if ESG and sustainability issues continue to be ignored.

On one hand, clients are therefore already demanding more concrete action and no longer accepting greenwashing. On the other hand, companies are being challenged to re-evaluate their policies and strengthen their capabilities to generate long-lasting value, to lead change towards a more sustainable, accountable, data-backed up investment future and, needless to say, to comply with ESG standards when delivering advice for sustainability-based portfolios. The ultimate objective is to guarantee that a company’s commitment to ESG effectively carries benefits for clients in terms of sustainable growth and increased competitive advantage.

Beside this, ESG still poses one massive challenge for wealth managers, asset managers and banks: given that an ESG strategy that efficiently functions is built on data, the industry is facing a data challenge.

Indeed, ideally, information about how data is gathered and managed, or about companies’ direct activities and reports about it, would be transparently disclosed by a given company. In the real world, companies do not always objectively report on how they meet their ESG goals, which might cause losing current clients’ trust and potential clients’ consideration. On this regard, we notice that the overall industry still lacks a regulatory framework that manages how to provide disclosure, but companies can create an internal data environment and ESG reporting strategy independently to meet clients’ demands for more transparency.

Outsourcing, why should you embrace it?

As a result of the current uncertain economic environment, clients are nowadays increasingly interested in opportunities that significantly reduce costs, increase scalability and agility and enable technology. They are therefore highly considering outsourcing in their decision-making processes for 2022. Due to their advantages primarly in terms of growth accelerationg and efficiency maximisation, outsourcing practices are dynamically reshaping the wealth industry. Among outsourcing’s main drivers, we reckon:

Summing up demographics are changing in Wealth Management in 2022, but some long-established priorities remain: ESG is still on the front line, and outsourcing consolidates its positioning as an opportunity to embrace. Firms will be challenged to navigate in a world that constantly changes, but also stays a bit like the same; to implement a future-proof digital transformation programme, addressed to all generations, based on a strong ESG strategy, being fully aware that cloud is the main enabler to complete a smart digital transformation journey.