The wealth management industry has undergone revolutionary changes in the past years. Financial and asset management services have dramatically improved since the industry embraced the Internet of Things. But for all the significant changes that took place in the past years, this is just the beginning. More innovations for wealth management firms are expected to unfold as things move forward.
Trends That Are Reshaping Wealth Management Firms
To update ourselves and see how things are going, let’s take a look at the trends that are reshaping the world of wealth management firms.
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More competitive fee arrangements
The wealth management industry underwent a widespread fee compression in the previous year, and they are likely to do so going forward. As digital engagement models continue to leverage lower product costs and commoditize advice, the industry is compelled to come up with more competitive fee structures to keep up with the latest changes in the marketplace.
The growing popularity of retirement planning at wealth management firms
Surveys show that one in three Americans barely have any savings come retirement age. These findings seeded a growing concern among baby boomers and millennials, which comprise the largest chunk of the country’s workforce.
To take advantage of this rising trend, the wealth management industry has to develop better offerings and improve their services to ride the demand and further entice the masses.
Focus on data refinement
Clients are more critical of their investments than ever. Thus, the clamor for a more accurate, transparent, and feasible data is a demand that the industry and its multitude of advisors need to address.
Wealth management firms have to go the extra mile to certify the veracity of their data as this is the key to upselling and earning customer loyalties. This may mean employing artificial intelligence and incorporating IoT into their operations. Human advisors may need to step back and give way for innovative techniques that enhance both precision and accountability.
A more hybrid approach for wealth management firms
Leveraging the AI-based approach to scale financial planning services has produced exciting results for the industry. The simplicity and cost-efficiency of these new-age solutions make them a valuable alternative in many cases. However, in most scenarios, technology alone is not an effective enough tool in delivering advice.
Nothing compares to the personalized experience that human interaction can bring to the table. Thus, the need for a results-oriented hybrid of both personal and AI-based approaches.
Changing partnership and collaboration landscapes
Survival in this cutthroat industry partially depends on the relationships that wealth management firms and companies build with wealth-tech providers. Despite being newcomers in the asset management market, fin-tech companies have assumed an essential role in carrying the industry to the next level.
For investment firms to make the most out of these partnerships, they must be willing to embrace change, become open to ideas of further engaging digitalization, and welcome opportunities to build a smarter wealth management ecosystem.
Widespread awareness of sustainable investing
We have the millennials to thank for cultivating awareness on sustainable investing. Studies show that the new generation of investors is drawn to making socially and environmentally conscious investments. They are as keen on putting their money on causes that impact the society and the planet as they are about making a profit, and other generations are following their lead.
With sustainable investing becoming prevalent, wealth managers are developing new financial plans rooted in the ESG (environment, social, and government) philosophy. Indeed, wealth management has grown to adopt a more socially impactful route.
Perhaps it’s too early to predict the future of wealth management. However, with the way things are going, clients and investors alike can expect a more credible, personalized, and efficient delivery of services in the years to come.