What will the wealth management industry look like in 2019? If you’ve been in this industry for a while now, you can’t but notice that your environment is fast changing. Our team has identified and compiled the challenges and opportunities that you will probably face or continue to face in 2019 and beyond.
The rise of compliance costs
According to a 2017 report of Duff & Phelps, compliance costs could more than double at the horizon of 2020. The deployment of intelligent compliance automation tools is identified as way to reduce large volumes of repetitive tasks. From a general point of view, technology will increasingly assist financial firms in their risk management activities.
“Forever young” wealth management strategy
Scientists think that the first individual to reach the age of 150 years old has already been born. Longer life expectancy directly impacts wealth management strategies as the current financial models were not designed for people working until 65 or 70 and retiring for 30… or up to 80 years.
The HNW women market
By 2028, women will own 75% of the discretionary spending around the world. Still, most wealth management firms and financial advisors are not addressing women as a specific audience. According to the Boston Consulting Group, 73% of women are not satisfied with the financial advisory and consulting they received.
The Millenials emergency
This has been a hot topic for several years now, it is now an emergency. By next year, 2020, millenials will represent 50% of the workforce. The opportunity for wealth management firms is vast and so is the work to be done to attract this clientele who is especially distrustful of traditional financial services.
Digital is NOT an option any more
There is no turning back. ⅔ of HNWIs declare they would leave firms that do not allow digital transactions and communications, according to the World Wealth Report. Basic features are not enough as they expect a real digital and “delighting” experience.
Adding sense with impact investing
In 2018, impact investing represented $9 trillion of investment. HNWIs have been massively calling for financial strategies that achieve financial return and broader societal or environmental impact. The demand for impact investments is high, showing the search for sense that is not contradictory with the search for returns. However, accurate tracking and reporting on impact investing can be challenging.
Growing interest of HNWI for cryptocurrency
The cryptocurrency market is still not a major part of HNWI portfolios. However, since late 2017, there is a fast growing interest for cryptocurrency as a store of value. Over 1 out of 2 HNWI declares to be somewhat or highly interested in holding cryptocurrencies. This interest is over represented (71%) among HNWIs aged 40 and below (Millenials) who expect deeper information and advice from their financial advisor.