5 wealth management trends to pay close attention to

If you’re hoping to capitalize on new opportunities and remain ahead of the curve, it’s crucial to stay on top of current industry trends.

One of the most significant shifts the market has seen in recent years is the change in investor demographics. As to be expected, older investors are being replaced by millennials and Gen Z. These younger investors often have very different financial goals, and varying ideas on what to do with their money than those who came before them.

Another area of the industry where wealth managers need to ensure they remain competitive is the ever-growing technology sector, especially as consumer expectations have fundamentally shifted in recent years. Data aggregation, open banking and fintech providers can help professionals provide greater value to clients.

Here are some significant trends that emerged during 2022, and that we expect to see more of in the next 12 to 18 months.

DIGITAL CHANNELS AND DATA INSIGHTS

The latest generation of high-net-worth clients is increasingly likely to consider digital channels when it comes to managing their wealth.

Wealth management professionals need to leverage technology and maximize client data to develop new offerings that meet these changing demands. By using predictive analytics, industry experts can develop value propositions that are specifically targeted to each client.

This strategy should include various pieces of raw data, including investor preferences, lifetime values and investment history. This information can help predict future client behavior and further aid the process of delivering more value.

AGILE DISTRIBUTION

Wealth management professionals have shifted their focus from products to client service. Firms are now leveraging technology to implement extensive automation and insight-based solutions. This technology helps firms to provide personalized services for their clients, while also achieving the response to market changes clients expect.

Agile distribution revolves around transitioning a firm’s service delivery model to a system based on agile principles, enabling next-gen capabilities. Technologies such as cloud computing, big data, APIs and artificial intelligence help firms adapt to the ever-evolving landscape, from a regulatory and operational perspective, without having to deploy entirely new technologies unable to meet the changing demands.

In other words, agile distribution translates to modern technology that is nimble and can adapt to operational, regulatory, and client demand changes without implementing new technology or needing custom development work. This ultimately making it easier to gain efficiencies and service clients, allowing firms to meet new demands from clients more proactively.

[More: Accelerate inclusion by adopting agile strategies]

REDUCING COMPLIANCE COSTS

Technology plays a significant role in simplifying the reporting process needed for regulatory compliance. Frequent changes are driving firms and professionals to take advantage of solutions that streamline operational processes while reducing costs. Partnerships with solution providers are predicted to become essential for firms to respond quickly to changes in the regulatory landscape and to confidently meet regulatory requirements.

TECHNOLOGY INVESTMENTS

Remaining competitive in today’s environment requires wealth management professionals to strategically align any technological investments with specific business requirements. This will reduce the risks of implementing new technology while also helping advisers engage clients more effectively at a lower cost.

Three areas of particular interest when it comes to technology investments being made in 2022 include enhancing the adviser-client experience, back-office and compliance efficiencies, and integrated workflows across the organization.

VIRTUAL TOOLS

Virtual tools can help provide clients with regular, automated reports of their assets, sequentially allowing advisors to shift their focus on gaining new clients and providing advice. Automating various client interactions helps to relieve cost pressures as well.

Virtual tools also can help to drive behavioral change in investors by assisting them in making data-driven decisions, and things like next-best-action engines can help advisers streamline their roles and responsibilities by recommending courses of action for clients.

It’s clear that technological advances in the industry are driving several trends in wealth management. And while the industry has been historically averse to adopting new technologies, emerging tools offer incredible opportunities for firms to improve their bottom line. 

[More: The latest in financial #AdviserTech — July 2022]

Kristian Borghesan is vice president at FutureVault, a provider of secure document management exchange and digital vault solutions built for financial services and wealth management firms.