Wealth Management Megatrends 2030

In my years following the wealth management industry, I have seen many momentous changes--often arising from technological advances and regulatory evolution. The rise of discount brokerages, digital banking, and fintechs are just some that come to mind.??

Now the industry is in the midst of another upheaval, one happening with even greater intensity and speed. An explosion of new game-changing technologies is transforming wealth management and spurring the rise of new types of digital competitors from inside and outside the industry.? Regulation is again playing a critical role, as policy makers adjust to a world of rising digital innovation and new flavors of risk.??

At the same time, escalating social and stakeholder pressures, heightened by generational shifts, demographic change, and social concerns, are redefining investor values and expectations.? Add to this a global economic reset with shifting wealth and retirement trends and we have the makings of the next big revolution in wealth management.?

This next cycle will only build momentum throughout the decade. Here are nine megatrends that we at ThoughtLab see reshaping the industry by 2030:?

1. The investor of the future?

Over the next five years, tectonic generational, demographic, and economic shifts will change the face and geographic dispersion of investors.? How will wealth management firms need to rethink their strategies to address the different needs, values, priorities, lifestyles, and digital behaviors of a new breed of investors, while meeting the retirement and healthcare needs of older generations???

2. Frictionless investing??

In the years ahead, investors will expect investment providers to provide them with the same rich digital experiences they get Amazon, Netflix, or Apple. What will a frictionless investor experience look like by 2030? How will experiences become more immersive through the Metaverse, more personalized through AI, and more seamless through embedded investment apps? What role will brick-and-mortar branches play????

3. Democratization empowers retail investors??

Democratization will give retail investors more options for gaining returns and managing risks as they take on more responsibility for directing their own investments. To what extent will retain investors seek hedge funds, IPOs, private equity, and other offerings now reserved for the rich? What other new products and services, like digital assets and custom indexing, will be widely adopted? What stance will regulators take??

4. Social impact redefines shareholder value??

By 2030, social impact investing will go mainstream, as investors combine ESG and financial criteria when evaluating their investment portfolios. How will ESG change the way investors manage and assess their portfolios and set their personal goals? What ESG data will they need, and which new social impact investments will they seek? What kinds of returns will they expect? What fees are they prepared to pay???

5. Web 3 drives new era of innovation?

The advent of new technologies—from AI, blockchain, decentralized finance, and omni-cloud to smart devices, IoT, and the Metaverse—will trigger an unprecedented flurry of innovation that will remake the industry. These new digital solutions will redefine all aspects of the wealth management value chain but will also make some intermediaries and business models obsolete and usher in new risks.???

6. Next-generation pricing models??

What will investors be willing to pay for in the future? Which value propositions will work best for them? Will digital pricing models, such as subscription fees, replace traditional fee and commission-based models? How important are areas like personal advice, custom offerings, and digital innovation in justifying fees? How will wealth firms grow the top line growth and preserve margins in an era of heightening fee compression? ?

7. Shifting roles between humans and machines?

In a digital world where clients will conduct most transactions and get information through hand-held devices, humans will need to take on new functions. Which investment activities will require a personal touch? What role will financial advisors play and how will they incorporate digital innovation into their work processes and client interaction. Which criteria will investors use to choose and assess investment providers??

8.? Reinvented business models?

As the decade unfolds, investment providers will adopt new business models to enable them to adapt to widespread industry upheavals. One business model, already emerging, is a platform-based ecosystem that allows firms to innovate at scale and offer a richer set of products and services. Another is a blockchain model, which eliminates intermediaries, cuts costs, improves security, and actively involves customers.?????

9. The coming market shakeout?

The level of change over the next five years will likely trigger a major market shakeout and consolidation. Who will be the winners and losers: One-stop financial supermarkets or niche players? Fintechs or incumbents? Tech companies or big brand retailers? Which types of organizations will the next generation of investors prefer? Will the age, wealth level, or location of the investor make a difference???

To help wealth management firms succeed in a time of revolutionary change, ThoughtLab is teaming up with Deloitte, FNZ, and a small cadre of other market leaders, to conduct a rigorous study into the changing needs and priorities of worldwide investors over the next five years, and the strategies wealth service providers are taking to meet them.??

To learn more about how you can participate, feel free to contact me at [email protected]?