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Wealth management : 8 trends for 2022-2023 that should not be ignored

16 Feb 2022

In a pandemic or post-pandemic context combined with an acceleration of digitalization, the world of wealth management is facing multiple challenges at an unprecedented rate.

In this article, we share 8 trends that the KeeSystem team has identified as what should be prioritised by wealth management companies and family offices in 2022.

Wealth & asset management : 8 trends to watch in 2022

 

1 | Millennials’ financial management differs from that of their parents.

 

Younger generations of investors educate themselves and conduct one-sided research before choosing their advisor. This change in mindset that characterises this generation is also reflected in a shift in investment habits towards products that take into account environmental and societal issues such as ESG.

This change is forcing wealth management companies to rethink their offer, their client experience and their advisory strategy in order to appeal to Millennials.

 

2 | Digital Onboarding: a priority for companies in times of health crisis

 

Digital onboarding is a priority for companies in times of health crisis.

Digital onboarding is the process of automated acquisition through a digital device to onboard users in an agile, simple, safe and guaranteed way. From the client’s point of view, the initial information gathering phase is reduced, made fluid and simplified thanks to the secure transmission of the necessary documents digitally.

The simplification of the preliminary stages significantly improves the customer experience.

For example, 68% of clients expect 100% digital integration following the covid 19 crisis.

For the wealth management company, digital onboarding automates the creation of a new client account and reduces administrative exchanges with the client. In addition, the dematerialisation of documents reduces the issue of paper and eliminates the physical storage of documents.

 

3 | Digitalisation of the experience

 

70% of customers believe that the degree of personalisation is a key factor when choosing an advisor.

Among the investments capable of addressing these expectations, AI will be a key driver in 2022 and beyond.

Digitalisation via AI allows advisors to optimise investment strategies, to offer tailor-made products and to be closer to their clients. Ultimately, the integration of AI impacts the very profitability of wealth management companies, thanks to more relevant offers and even more personalised services offered without mobilising additional resources.

This is already the case for US companies that have invested in AI and are now reaping the benefits of their investment.

 

4 | The family office model continues to expand

 

The number of ultra-high net worth individuals has almost doubled in 10 years, from 102,000 in 2010 to 200,900 in 2020; over the same period their wealth has increased by 76%.

This structural evolution is accompanied by the rise of a new clientele, with more complex and personalised financial advice needs and thus the rise of a new generation of family offices.

The family office model is developing worldwide, and in France in particular, with players linked to a single family (mono-Family Offices), and structures that cater to several families (multi-Family Offices) which may be independent or housed within banks or management companies.

The growth of the family office model is driven in particular by expectations of a high degree of customisation, which goes beyond “simple” portfolio management. The family office model makes it possible to integrate the vision and values of investors who are looking for expertise, a vision of wealth management and a wide range of services.

Read also: Developing a family office service offering as an independent manager

 

5 | The explosion of digital asset strategies

 

2021 saw the emergence of many new trends in the cryptocurrency industry and related areas: from non-fungible tokens (NFTs) to metavers and Web 3.0. In 2022, these trends will continue and evolve.

Between 2021 and 2026, the global crypto asset management market is expected to triple, growing at a compound annual growth rate (CAGR) of 21.5%, from $0.4 billion in 2021 to a projected $1.2 billion. This trend is expected to be supported in particular by the fact that in the face of inflationary conditions, private investors are increasingly turning to digital assets such as cryptocurrencies.

According to the Wealth Report 2021, 72% of HNWIs have invested in cryptocurrencies and 74% in other digital assets.

Moreover, considered a confidential market at the beginning of 2021, NFTs (non-fungible tokens) represented a market of 41 billion dollars at the end of the year. This exponential growth positions the digital art and collectibles market at a value almost identical to that of the global art market.

Given this trend and the high demand from investors, many asset management companies have not yet integrated this expertise. This will generate a growing demand for asset managers qualified in crypto-asset management for their clients.

Source: The rise of crypto-asset management and why it matters to investors

Related articles

 

Decentralised finance, a technology trend that is shaking up the world of finance.

Blockchain infrastructure and trading in digital assets and crypto-currencies. 

 

6 | Hybrid advice is on the rise

 

Investors are becoming more and more informed and are managing part of their investments independently thanks to digital platforms. This new usage responds to a need for control and greater flexibility.

For wealth management companies, this “collaborative” channel is a means of “scaling”, access to a wider segment of investors allowing for cost rationalisation.

Personal advice is far from disappearing, but it is being transformed into an offer aimed at premium investors.

For example, 71% of HNWIs in Asia-Pacific, 63% in Europe and 53% in North America are already inclined to manage core transactions and access information independently.

 

7 | ESG performance measurement becomes a priority

 

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, one in five asset managers say their clients’ preferred sustainable investment approach is to optimise the ESG score of their existing portfolio.

43% of ultra-HNWIs and 39% of HNWIs under 40 are likely to request an ESG score for products offered by their firm.

This shift is forcing asset managers to align their strategy towards more socially responsible and sustainable choices.

Asset managers are trying to improve their ESG rating capabilities, either in-house or by partnering with WealthTechs specialising in ESG asset performance measurement.

 

8 | Creating integrated ecosystems as a working environment

 

Managers’ tools are opening up to enable smoother workflows.

From custodian banks, PMS, KYC, analytics tools, onboarding solutions and ESG asset management software, the working environment for independent asset managers in 2022 involves an extensive ecosystem of applications and softwares.

In 2022, the interconnection of different software and SaaS solutions becomes essential for smooth and enriched data management. From multiple independent tools, the use of APIs (Application Programming Interfaces) allows solutions to be connected to create a single, centralised working environment with automated workflows.

The API for our KeeSense portfolio management solution allows asset managers to connect their favourite tools and import KeeSense data directly from other connected software.

How can you integrate these trends in asset management into your asset management company or family office?

First, assess your organisation’s situation. You may already have integrated solutions or services that address the wealth management trends identified for 2022 and 2023.

After doing this assessment, you will have a better view of the opportunities for your asset management company that require action and potentially some investment.

To integrate most of the trends in asset management mentioned here, being equipped with a portfolio management software is essential. Having a technological solution is essential to meet these challenges.

 

How do you incorporate these trends in wealth management for your wealth management company or family office?

First, assess where your organisation situation. You may already have integrated solutions or services that address the wealth management trends identified for 2022 and 2023.

After doing this assessment, you will have a better view of the opportunities for your asset management firm that require action and potentially some investment.

To integrate most of the trends in asset management mentioned here, being equipped with a portfolio management software is essential. Having a technological solution is essential to meet these challenges.

 

About KeeSystem

 

KeeSystem helps asset management companies and family offices manage their business and their digital transformation more efficiently. We increase their impact in terms of services, profitability and business development through our KeeSense portfolio management solution.

 

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