Technological, economic, and demographic shifts will transform the wealth management industry by 2021, according to research report released by thought leadership firm Roubini ThoughtLab.
These shifts, the report says, will unlock tremendous global wealth, but also raise investor expectations for new advisory and digital solutions that some investment providers are not yet prepared to offer. Nearly half (48%) of the investors said that they will switch providers if their new needs are not met.
The report, dubbed Wealth and Asset Management 2021, is based on a survey of 2,000 investors and 500 investment providers across 10 major wealth markets, in-depth interviews, and economic modeling led by noted economist Dr. Nouriel Roubini.
The study was produced in conjunction with a diverse coalition of sponsors, including Bank of Montreal, Broadridge Financial Solutions, CFA Institute, Cisco, eToro, Schroders, SEI, and State Street.
The Roubini analysis foresees huge wealth creation across changing investor demographics over the next five years:
- Household assets will rise $89 trillion in 25 top markets, with the biggest gains coming from emerging markets, such as China, Mexico, and Poland.
- More than $50 trillion in investment will flow into the wealth industry from the rise in household assets in these markets alone, increasing the pool of investors.
- Millennials, Gen X, women, and emerging market investors will see their wealth climb and their investments grow. Even those with small savings will invest more thanks to greater market access through technology.
The report added that changing demographics and digital usage will transform client expectations over the next five years, faster than some wealth providers can cope.
Key findings from the research show that:
A top priority of 59% of investment providers is to build, partner or acquire fintech capabilities. This product strategy will resonate with investors: 37% said they would only work with a fintech associated with a trusted brand, and 45% said that fintech solutions can be very valuable when used with traditional investment services.
To stay competitive, most wealth firms are developing new digital capabilities, such as “anytime, anywhere, any device” access (55%), omnichannel customer experiences (48%), technology-enabled planning tools (45%) and improved performance analytics (41%).
Universal banks and mutual fund firms are more digitally advanced than other providers. More than two-thirds of these organizations have already set up in-house teams and incubators to drive digital transformation.
The research report indicates that wealth companies will transform their strategies, products, and business models to become fully integrated, digitally driven businesses by 2021.