By Rachel Harper
The past years have seen some great changes in the wealth management sphere. And while some of those changes underwhelmed, the beauty of it all is that the lessons from the previous years can serve as the foundation for creating better ideas and making sounder decisions for the year ahead.
Briefly, we will recount influential trends that continue to reshape the world of asset and investment management.
Digitalization As The Future of Wealth Management
Compared to other industries, wealth management was slow to adopt the use of technology and digital trends in its operations. For a very long time, the industry relied mainly on human intervention to draw in investors, develop investment options, and foster profitability.
But in an age where both the industry and its clients demand more refinement and fewer errors, they have found a compelling reason to change. The technological makeover has improved almost every aspect of wealth management by leaps and bounds. More than transparency, efficiency, and enhanced client relationships, digitalization introduced more innovative and effective ways of educating the new breed of investors about financial responsibility.
Technologies like Robotic process automation (RPA) and AI can provide better accuracy and productivity at lower costs. With RPA, repetitive wealth management tasks are automated so they are less labor-intensive but more precise. Advances in AI, on the other hand, are opening modernized channels for financial advising and changing the way people handle their finances.
With humans willingly taking a step back for better precision and accountability, wealth management companies are set to make wealth management more reliable, convenient, and a better experience overall in the coming years.
Hybrid Co-sourcing/outsourcing is The Key
Third-party vendors play a significant role in the wealth management industry these days. Gone are the days when wealth management companies insist on developing their entire system and running all operational processes under their own roof. To keep up with the rapid evolution of today’s investment landscape, asset management firms outsource the more challenging, time-consuming, and technologically inclined areas of their operations.
As third-party vendors continue to develop more sophisticated and innovative technological solutions and middle-office service providers seek to expand and verticalize their offerings, wealth management firms can outsource some of their peripheral and non-core undertakings to gain flexibility and access to new markets through third-party expertise.
Forging Stronger Partnerships and Embracing Change
In the modern wealth management industry, staying on top of the game can depend on the relationships you build with wealth-tech providers. Though relatively new to the asset management market, financial technology companies are essential in building a powerful digital ecosystem – an important component to thrive in this technologically savvy generation.
To make the most out of these partnerships, investment firms must welcome transformation, embrace new technologies, and continuously work towards building a smarter ecosystem.
The industry is also witnessing closer bonds between originators and distributors, as firms and advisers augment their alliance and revenue arrangements with funding companies.
Sustainable Investing is In
Evidence shows that the new breed of investors are less interested in investing mainly for financial returns, and are looking into capitalizing in more socially and environmentally aware pursuits. Simply put, millennials want to invest in companies and funds that help protect the environment, alleviate poverty, promote human rights worldwide, and the like.
With more and more millennials putting their money on investments that make positive societal impacts, sustainable investing has gone mainstream. Recognizing this increasing client demand, wealth managers are carrying over the ESG (environmental, social, and government) philosophy in developing new financial plans and services.
As companies strive to develop the wealth platform of the future, investors can expect more efficient, streamlined and personalized services. Without a doubt, the new year will bring new wealth management trends that will help drive innovation further.
Rachel Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.
Money stock photo by Jacob_09/Shutterstock
