Kelton Corcoran is a senior content marketing specialist at NaviPlan, the financial planning technology provider of choice for more than 140,000 financial professionals.
As is an annual tradition, Capgemini just recently released its 2019 World Wealth Report that offers a breadth of valuable insights for wealth managers, firms, and the high-net-worth market at large. This report remains one of the industry’s leading benchmarks and sheds light on key areas where financial professionals can prepare themselves for the future of the wealth management industry.
This year’s insights show a crucial set of consumer demands and the path for which wealth management firms can meet the evolving needs of the market.
Here are some of the most important wealth management trends to know heading into 2020 and beyond.
1. Trust in wealth managers and firms is increasing
Despite an unpredictable economic environment as of late, consumer trust in their primary wealth manager and wealth management firm has increased from 78 percent to 79 percent and 79 to 82 percent, respectively. Still, nearly 40 percent of clients said they are not comfortable with their wealth managers’ current fee structure, a concern that better clarity could help alleviate. The SEC’s recent Regulation Best Interest rule plans to address in the broker-dealer space by requiring broker-dealers to provide a document titled “Form CRS” that will include a summary of the firm’s services and fees, among other information.
2. Focus on clarity and quality will help gain client trust
Client expectations continue to grow, and firms must stay ahead to attract and retain a strong book of business. Of high-net-worth investors (HNWIs) who indicated they switched wealth management firms, an unsatisfactory service experience was the leading cause for 87 percent of switching clients.
Surveyed HNWIs indicated a strong demand for more personalized support and valuable services throughout the wealth management value chain. Specifically, 86 percent of clients rated both investment management and financial planning services as important offerings to expect from their wealth manager.
Capgemini points out that in North America “wealth management firms have already made strides in enhancing client experience but can now also focus on equipping their wealth managers with robust tools, especially on the financial-planning front.”
Technology has fundamentally changed the financial advice industry. What's next?
3. Attracting and retaining talent becoming a very real concern for firms
As client demand for wealth management services continues to rise, the average age of wealth managers is also rising – and inching towards retirement. Firms fear that a talent gap is on the horizon and have been “working to continually assess their firm’s internal structure and incentives while understanding their wealth managers’ expectations.” Learn more about putting your firm in the best position to recruit new advisors.
Aside from wealth managers reaching retirement age, the loss of talent to other firms and spaces in the industry is a reality. Managers are now opting to leave their current firm to become a Registered Investment Advisor (RIA). This transfer to the RIA space has been accelerated year-over-year, with 60 percent more managers moving over in 2017 compared to 2013.
4. Clients concerned over the state of online and mobile platforms
The more ways that wealth management firms can appeal to younger clients, the easier it will be to retain a dense book of HNWI business moving forward. Less than 50 percent of HNWIs indicated they are satisfied with their current online and mobile financial platforms.
With nearly $30 trillion in wealth set to transfer in the coming years, firms can lead the charge by adopting technology solutions that make it easier for their clients to access valuable services. Considering the high demand of clients for financial planning, a client portal tool can help wealth managers grant clients greater access to their advice and make plans more engaging.
5. Clients demand a personal connection
The capabilities of technology in the financial services space continues to expand every year, but clients still show a high demand for a personal connection with their wealth manager. Though 86 percent of HNWIs expressed the desire for their wealth manager to personally “understand my financial situations, needs and goals,” managers’ time remains limited as 20 percent of it is spent on administrative tasks.
The opportunity exists for firms to cut down on time-consuming tasks that could instead be used on value-added activities and time with clients. For instance, firms can implement a more efficient planning method in the central planning model. Additionally, client portal solutions can help by expediting data collection and entry, while also reducing time spent revisiting plan details by giving clients a more constant connection to their plans outside of meetings.
Learn how relying too heavily on the simpler goals-based planning method can be detrimental to advice quality in this free whitepaper >