The old Wall Street saying that the ‘trend is your friend’ apparently doesn't apply only to momentum stocks, but also to wealth management practices when it comes to private market investing, AI and personalization.
The recently released EY report, Top 10 resolutions for wealth and asset management success in 2024, highlights the "resolutions" that that wealth managers should make to effectively prepare for what is shaping up to be a challenging year of market uncertainty and earnings pressure.
Mike Lee, global wealth and asset management leader at EY and one of the authors of the report, says fund flows into private markets, especially ones that aren't correlated to publicly traded markets, haven't slowed since both legs of the 60/40 stock/bond portfolio buckled in 2022. In his view, financial advisors should continue to follow the money into those private vehicles.
“Historically, those private markets have been the domain of institutions and high-net-worth investors. It's incredibly important to be able to provide the opportunity to expand access to these markets,” Lee said.
And it’s more than simply pushing “products” as it has been in the past, says Lee. The new trend is investing with an outcome or an end game in mind, whether that's retirement, college or even a wedding.
Another common thread industry participants continue to pull on is personalizing outcomes for the end consumer. To achieve that end, Lee recommends using a “holistic” approach to leveraging the broader ecosystem.
“You can partner with others to bring the best of what other organizations have, and take a more flexible and modular approach where you can be the architect and the orchestrator in some respects and be the provider and the supporter in others,” said Lee.
Finally, Lee says AI is an unyielding trend that will take many forms and have many uses in the wealth management industry in years ahead. The primary area he's focusing on when it comes to AI is “preprocessing,” which highlights structure, governance, and “getting your data house in order.” Then at the other end he's watching “post-processing,” which Lee defines as “making sure from the risk and regulatory compliance reporting standpoints that your outputs are what you expect them to be.”
“People want to understand what organizations are doing, whether it's around trying to improve operational efficiencies on the one hand or trying to improve commercial outcomes on the other,” he said.
Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.
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“I respectfully request that all recruiters for other BDs discontinue their efforts to contact me," writes Thomas Bartholomew.
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