Firms that are able to achieve scalability are reaping the benefits in terms of profitability, the research found.

It split firms into ‘leaders’ – representing 41 percent of firms who are achieving scale and profitable growth – and ‘followers’ – accounting for 38 percent of firms, who are deemed to be struggling to convert investment into tangible results. The remaining 21 percent sit somewhere in the middle, unable to demonstrate consistent scalability.

While less than half are achieving consistent scale, the link between scale and profitability is clear.

Firms defined as leaders are over four times more likely to achieve more than 15 percent profit growth in client services, with 18 percent of leaders managing this compare with just four percent of followers.

There are a number of barriers firms face when it comes to achieving scalable growth. The top three structural barriers were cited by respondents as: integration issues across systems (45 percent); poor data quality (41 percent); and fragmented technological infrastructure (33 percent).

Moreover, approximately 40 percent identified client onboarding processes as a “major constraint” to growth, highlighting clunky and lengthy systems.

With this in mind, unlocking scalability successfully may appear to be a significant challenge for wealth managers.

However, Manuel Pincetti, managing partner, Monitor Deloitte, believes it is possible for firms to overcome these barriers. For him, the “turning point” will come in how technology expenditure is seen.

Currently, most firms view this spending as capital expenditure (CapEx) rather than operating expenditure (OpEx). The “shift” in profitability will come when this flips and wealth firms see technology spend as OpEx.

Another clear “profitability driver” is the as-a-service model. The research found the firms that have adopted these models consistently achieve double-digit profit growth, regardless of size.

This does not all need to be done in-house, meaning firms do not have to invest in hugely expensive internal technology teams.

Indeed, Mr Pincetti stressed “mission critical processes” can now be outsourced to reputable third party vendors. For wealth firms, this represents a significant opportunity to expand as it can help solve issues surrounding accessing top talent, as well as remove headaches surrounding compliance and system updates.

Firms are already doing this, with approximately a quarter already using as-a-service models as a primary scaling lever.

In the next three years client onboarding via as-a-service is expected to grow from 24 percent to 54 percent, according to Objectway’s research.

Technology providers are seeing these partnerships growing in volume, with Objectway’s chief executive – Luigi Marciano – acknowledging certain activities “do not necessarily have to be done internally.”

Partnering frees up firms and allows them to focus on what they really do well, deepening client relationships and hopefully improving client outcomes.

The key to a successful partnership is taking a bigger picture view and looking for greater opportunities. True partnerships are “not driven by cost cutting,” Mr Marciano stressed.

AI adoption is another area wealth firms have the opportunity to gain a competitive advantage. Presently, the majority of wealth firms are not prioritising embedding AI into their processes and business activities.

‘Leaders’ are more likely to do this, with 56 percent of these firms doing so, while just 33 percent of ‘followers’ are prioritising AI.

For those struggling with integrating AI, Mr Marciano encouraged them to look externally. “It is much more effective to partner” with a specialist, he argued. This is due to the need for clean, integrated data to be able to fully realise the benefits on offer, as well as the time and investment required to keep up with the frequent developments and upgrades on offer as the technology matures.

This time is “like the golden age” for AI, acknowledged Mr Marciano, but the real opportunity lies not in the technology itself, but in how effectively it is embedded into solution design, orchestrated across ecosystems, and aligned to client outcomes.

As ‘leaders’ realise this, wealth managers are now “beginning to see the potential and opportunity” of AI and use cases are gradually starting to be seen, but there is still a long way to go if the full benefits are to be unlocked by the industry to achieve greater scale and efficiency.