In this article, we share 8 predictions that the KeeSystem team has identified as what should be prioritized by wealth management companies and family offices in 2024.
Wealth & asset management : 8 trends to watch in 2024
1. ESG and sustainable investing
43% of ultra-HNWIs and 39% of HNWIs under 40 are likely to request an ESG score for products offered by their firms.
A report by Bloomberg Intelligent predicts that global ESG assets will exceed $53 trillion by 2025, accounting for about one-third of the projected $140.5 billion in total assets under management.
In addition, 1 in 5 asset managers say their clients’ preferred sustainable investment approach is to optimize the ESG score of their existing portfolio.
This shift is forcing asset managers to align their strategy towards more socially responsible and sustainable choices.
Recommended actions :
- Expand ESG offerings to meet this growing demand, ensuring they can provide both broad and niche sustainable investment options.
- Improve ESG rating capabilities by partnering with technological solutions specializing in ESG asset performance measurement.
2. Regulatory Reporting Requirements
At KeeSystem, we’ve been in the wealthtech industry for over a decade and this is a prediction that has been valid since we started !
2024 continues to bring complex regulatory challenges. Wealth managers face an evolving landscape of UCITS, AIFMD, MiFID, and other regulatory frameworks.
To stay compliant, wealth management professionals need a deep understanding of the regulatory changes which can be a real daily challenge.
The implementation of ESG regulation also requires to comply with the European Securities and Markets Authority’s guidelines
Besides these requirements, wealth managers are already facing extensive reporting obligations due to regulations like UCITS, AIFMD, MiFID, DTCC reconciliation under EMIR, Solvency II, ANNEX IV, OPERA, among others. These regulations necessitate an increased focus and dedication towards regulatory compliance tasks.
- Adopt comprehensive compliance solutions: with the increasing complexity in regulations, wealth managers should adopt solutions to automate their compliance controls with a high level of personalization.
- Integrate advanced reporting capabilities: integrating advanced reporting capabilities into the compliance processes can also help allow the workload related to compliance management. These should facilitate efficient, accurate reporting that aligns with the latest regulatory standards, reducing the risk of non-compliance and enhancing operational efficiency.
3. Millennials and the multi-generational wealth transfer
The rise of Millennials and Gen X in the investment arena brings a distinct set of preferences and attitudes towards investing. Concurrently, as baby boomers begin passing their wealth to younger generations, wealth managers face the challenge of adapting services to meet diverse needs.
Statista’s 2021 report indicates a significant shift of wealth towards individuals aged 50 to 70, underlining the need for adaptable wealth management strategies.
Cerulli Associates’ projections show Gen X and Millennials inheriting upwards of $57 trillion in the next few decades, necessitating a comprehensive approach that includes estate, inheritance, and trust planning.
Furthermore, these younger investors, characterized by Deloitte as ‘Re-wired investors,’ demand personalized attention and advice tailored to their unique circumstances, combining traditional wealth management strategies with an understanding of their specific objectives, preferences, and independent decision-making tendencies.
- Develop personalized multi-generational wealth services : create offer services tailored to the unique needs of different generations. This includes specialized estate, inheritance, and trust planning to efficiently manage the significant wealth transitions expected between baby boomers, Gen X, and Millennials.
- Enhance personalized investment strategies : implement advisory services that focus on individualized investment strategies. This involves understanding and catering to the specific objectives, preferences, and decision-making styles of each client, especially the younger, more independent-minded investors.
- Adopt an advanced CRM for In-depth client knowledge : Leverage a powerful CRM software designed for wealth management to gain a deep understanding of each client’s financial history, preferences, and future aspirations. This detailed knowledge is essential for developing tailored multi-generational wealth services and personalized investment strategies.
4. The Era of personalized wealth management
This is what strikes us the most at KeeSystem in 2024. The skyrocketing demand for ultra-personalization.
The trend towards personalized wealth management emphasizes tailored strategies and services for investors according to their unique financial goals, risk tolerance, philanthropic goals and long-term objectives.
The shift from standard investment advice to holistic, client-specific guidance involves diverse investment approaches and funding strategies.
Wealth managers and multi-family offices are increasingly focusing on bespoke services like tax planning, estate planning, and investment advisory services.
- Collect and use clients’ insights with a CRM : gain a comprehensive understanding of the clients’ financial situations and expectations. With a wealth management CRM such as KeeSense, each client’s specific goals, preferences, and risk tolerance is saved and qualified to allow relationships managers to offer an unique experience and asset managers can design ultra-personalized investment strategies.
- Invest in an integrated wealth management solution capable of managing multiple asset classes, custodians and currencies. This allows creating and managing investment portfolios that include the new demand for specific wealth management strategies.
5. Enhancing client engagement with digital onboarding and reporting
Digital onboarding has become crucial, particularly post-health crisis, offering a streamlined, secure process for client data acquisition.
This simplification significantly enhances client experience, with 68% of clients expecting complete digital integration.
For wealth management firms, it means automated new client account creation and reduced administrative tasks.
Additionally, in today’s competitive environment, providing a superior digital reporting experience through a client portal is vital. This portal should allow clients to access real-time performance and risk metrics, along with detailed security-level information, moving beyond the limitations of static, periodic reports.
- Clarify and improve the digital experience of onboarding by collecting your clients feedbacks
- Automate and integrate digital onboarding : wealth management firms should prioritize implementing advanced digital onboarding platforms. These systems should not only streamline the client onboarding process but also ensure data security and compliance with regulatory standards. Learn more about digital onboarding with KeeSense here.
6. The role of technology in wealth management
Technology keeps transforming wealth management at a fast pace. With the emergence of AI in 2023, there is no doubt that this revolution will strongly impact wealth and asset managers – with more impact in future months.
If technology evolves, it addresses that same needs it always has among wealth management professionals : streamline operations, reduce costs, offer improved services, gain time… in order to maintain à significant advantage.
This includes the use of a powerful portfolio management software as well as the progressive adoption of artificial intelligence and machine learning to automate investment decisions.
- Don’t think technology is a “nice to have” : if you think you are behind the technology schedule, the best time to invest was yesterday. The second best time is now.
- Look for technological partners that have strong technology with the capacity to preserve your unique touch and humanity (this is what we are 100% dedicated to at KeeSystem!)
7. Enhanced risk management
In 2024, with ongoing market fluctuations, investor expectations for thorough risk management are heightened. Asset managers need to maintain robust processes and deliver high-quality risk reporting.
Essential analytics such as portfolio sensitivities, scenario assessments, stress testing, risk contributions, liquidity analysis, and performance analysis are crucial.
- Create and automate risk KPIs: learn more about KeeSense risk management capabilities here.
- Deploy daily monitoring of regulatory and risk profile limits : so you can be alerted in case of anomalies. Today, compliance and risk management are essential to preserve your clients’s interests as well as your company’s reputation.
8. Managing complex data
In 2024, we expect a growing trend toward enhancing data strategies for increased operational efficiency, including portfolio analysis, client reporting, and regulatory compliance.
Many wealth management companies are shifting from basic analytics to more sophisticated descriptive and predictive analytics, integrating both internal and external data.
This shift aims to create detailed client profiles, improve decision-making and favor service delivery. However, this comes with some challenges.
Indeed, managing large data volumes, especially with new ESG or risk metrics, and the complexities of utilizing big data and advanced analytics require specialized skills and significant technology investment.
- Elevate data integration, data management and consolidation with adequate solutions : data integrity is essential to generate reliable information for decision making. In 2024, being able to import and consolidate multi-source data is essential, including using API to connect to external data sources. Learn how here.
It’s time for action
Facing the multiple challenges of 2024, technology with a high degree of personalization is essential to effectively address investors needs while dealing with operational and regulatory constraints.