Firms are doing their best to differentiate but many wealth managers fear that a brand revolution is just round the corner and the retail sector will eat further and further into the traditional wealth management space. The ‘millennial’ generation that will soon be controlling vast amounts of inherited wealth are used to consuming substantial amounts of data on the go and having far greater access to and visibility of their financial affairs. Alternative service models facilitated by digitization, such as automated investment advisors and hybrid delivery, have the potential to meet this need but are currently underdeveloped, and the ability to interact and execute through new channels (aka mobile devices) will be a minimum expectation.
Semantic technologies, and eventually artificial intelligence, will have an even greater impact. The ability to trawl “big data” sources to piece together relationships and analyse behavior patterns to build highly accurate customer segmentation is the most obvious use, but I can also conceive of strong usage in product management, client onboarding, KYC and compliance.
Of course, as the customer becomes more ‘remote’ in terms of face-to-face interaction, how will wealth firms ensure that clients remain ‘sticky’? This is the area where the truly innovative firms will come to the fore – and many will fall by the wayside.
It used to be easy to determine what was happening in the wealth management world: look at what new practices the institutional asset managers had been developing about ten years earlier, adapt it to a wealth management context and you could anticipate what was about to be introduced.
In the future this relative positioning may well be reversed, with the wealth space leading the way and influencing the institutional arena rather than following it. Trustees and asset owners that are accustomed to readily accessing their own financial information will demand consolidated portals and more transparency from their asset managers.
The leader may well become the follower!
