Wealth management: Reframing for growth
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Many wealth management senior leader discussions and initiatives in 2021 will undoubtedly revolve around the immediate business implications of the COVID-19 pandemic, the speed of vaccine-enabled recovery, and firms' abilities to ensure their businesses emerge stronger. Given this, we believe it’s worthwhile to also take a step back and look at a broader picture of the wealth management landscape in the wider context of major current and emerging trends.
In our recent exploration of the?Wealth Management C-Level Survey done by a 3rd party research firm, participants identified six global megatrends they expect will make their businesses become more dynamic and deliver higher client value going forward:
While some of these trends are converging globally, others may have a more regional impact, but all are expected to require a response on a local level by industry players.
In this perspective, we lay out three key areas these trends will likely impact and what that could mean for North American markets.
Impact area one:
Advice and experience will matter to clients more than ever
Advice is increasingly becoming the core service in?the wealth management industry. The pandemic merely accelerated this trend. In addition to amplifying in importance, we could deduce that advice is evolving along a continuum that ranges from pure product-based advice to more goal-based advice. Advice is increasingly expanding toward broader holistic advice spanning assets, liabilities, and client experiences, which encompasses intangibles like trust, security, and access to exclusive networks. Modern technology is enabling more scalable engagement with current and new clients, regardless of the magnitude of a client's personal wealth. This is broadening the market to include underserved less affluent segments, who have an increasing need and demand for affordable advice. We believe that the next wave of innovation will be catalyzed by the confluence of all segments around holistic advice, with North American firms staying at the forefront of the advisory evolution. Firms are reimagining new offers and pursuing strategic mergers and acquisitions to expand their channel and client base.?Key blockbuster tie-ups have structurally consolidated the brokerage sector—retail and investment banks are using acquisitions to gain their fair share of the wealth market.
Impact area two:
Client interactions will focus on higher-value advisor interventions supported by digital tools
Advisors are under increasing pressure in an evolving "always on" working environment in which client demand for more proactive, frequent, and "better" information and ideas is reshaping how the industry works and how advisors must adjust their workload by eliminating unproductive administration time to free up more time to meet these client needs. Data and analytics are allowing advisors to offer individualized investment recommendations, making them more relevant and allowing them to work the often-ignored bottom half of their books to drive growth. Interaction is expected to evolve towards a blend of face-to-face and remote, providing more personalized and higher value interventions with advisors, enabled and supported by digital tools to better scale the delivery of advice.
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To date, the digitization of client relationships has mostly been completed, delivering on automation and convenience of experience. The next wave of digital is focused on making these digital interactions "personal" by truly delivering a contextual experience and the quality advice that clients need.?
While leading firms are achieving this through the use of cutting-edge, client-focused technology and analytics, persisting issues in middle and back office efficiencies are crucial enablers ripe for disruption. The industry continues playing catch up to its retail financial services counterparts.
Impact area three:
The sense of financial "wellness" is expected to progressively reshape how wealth is discussed, positioned and measured
The concept of wellness has broad application, It is essentially a state in which people attempt to take proactive control of their financial, physical, lifestyle values, and mental well-being. COVID-19 has expedited the perception of its significance and raised demand for all types of wellness. We believe financial wellness will progressively become more front and center for wealth managers. Education will play an important role too.
Longer life expectancies and more complicated financial lifestyles contribute to a greater emphasis on holistic wealth management. Firms have used joint ventures and partnerships to expand their insurance, lending, and alternative investment services, empowering advisers. Wellness-led offerings are concerned with how endemic issues like as health and eldercare, financial literacy, and sustainability affect client segments and fit into the larger picture of holistic counsel.
Where we’re going:
we now see more convergence in players adopting a new playbook for 2021 and beyond. This would be necessary, as players transform and innovate to become next generation wealth managers dealing with upcoming events such as progressive intergenerational wealth transfers, serving new wealth creators such as entrepreneurs and women, or tapping into ESG and non-investable assets that could further drive the industry’s sustainable growth perspectives up to 2025. Firms should continue to innovate on trust with their clients. COVID-19 has proven that quality advice and client interactions can be provisioned remotely, and the pandemic has structurally reset many firms’ advice propositions.
Reference:
Accenture. (2021, January 16).?Wealth management: Reframing for growth in 2021. Accenture.com; Accenture. https://www.accenture.com/us-en/insights/capital-markets/wealth-management-reframing-growth