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2022 Trends in Wealth Management Driving the Industry’s Future

2022 Trends in Wealth Management Driving the Industry’s Future

In 2022, wealth management firms consisting of commercial, and retail banks, universal banks, fund management companies, online trading platforms, private banks, brokerage firms, and family offices, are in a reinventing mode. Demographic shifts (before 2030, millennials will be five times wealthier than today) and increased digitalization (automated workflows, improving hyper-personalized products, the impact of data analytics in client acquisition, servicing, and retention) drives profound changes in an industry that is in a hurry to shed its ‘conservative cloak.’

Here are 2022’s top seven trends for the wealth management industry 

Soul Searching and Money on their Minds

Pandemic brought in waves of reflection. As people began rethinking their relationships with work, purpose, and money, COVID variants brought stock market uncertainty. Low-interest-rate environment prevailed, cash usage fell, inflation rose, remote working changed the nature of wealth advisory services, fund managers favored diversification approaches, and cloud computing (amongst other technologies) gathered steam in its industry journey.

Every dark cloud brings its silver lining.

In the last 24-months, the spurt in financial planning needs – short and long term – shows enhanced customer motivations to envision, plan and start on their life goals. So, what’s needed? Hordes of informed customers today look for competent (and digitally equipped) wealth managers to help them across the spectrum – from tax advisory to estate planning and will creation and everything in between. 

Blockchain and crypto complexity is no longer ignorable. 

While blockchain impacts across retail banking and asset management get discussed, it is a matter of time when wealth management use cases see the applications of real-time settlement models, single point of truth, automated investment vehicles, and smart contracts. The distributed ledger technology promises to severely disrupt the industry – from how financial transactions are executed (threatening transaction fees), crashing costs of KYC and investment profile transactions, and more importantly, when cryptos are offered as a mainstream investment asset choice. A few banks (UBS) are experimenting with distributed ledger technology-based trade finance systems.

Baby Boomers pass the baton to Millennials. 

In the generational relay race, as millennials prepare to run the next leg, the technology functions as the baton. The wealth management industry, to be fair, has been in a preparation mode for some time – advisors’ compensation structure has moved from a compensation-based model to goal-based frameworks. The new generation advisors lean towards data and analytics to juggle multiple investing strategies with often contradictory client asks. The sweet spot is to stack the highest returns via a hyper-personalized portfolio aligned to unique life goals and lifestyles.

And what are the technology systems driving the goal?

From cloud computing platforms for data and richer insights to embracing open API architecture for 360-degree customer views to Robot-based advisory services, predicting life events via AI/ML detection systems, and product propensity engines for affinity offers.

Old-world customer experience still wins. 

As more clients adapted to virtual meetings overnight, what surfaced as a winning practice was something the industry knew as its single biggest differentiator: trust in a one-to-one personal environment. The shift is evident. More than seeing a product as a single source of value, customers now seek value in the experience of how a product or service is delivered. Static, episodic, and manual planning processes have to go. Instead, the millennials and device-savvy customers ask for more dynamic, ongoing, and digital choices. Moreover, financial security has consistently ranked high on a successful wealth advisor’s list, but the pandemic emphasizes that one size will not fit all and focuses on combining risk planning with growth.

Developing an ecosystem focus for wealth management hypergrowth.

Hong Kong’s Total assets under management (AUM) rose 21% to $4.5 Trillion in 2020, while private banking and wealth management reported an increase of 25% to $11.3 trillion. In a stiff competition for global wallet share, the island region continually punches above its weight because of multiple factors. The transparent regulatory framework, technology-embracing climate (including robot-advisors and high VR usage in the industry), a professional talent pool, and the broad availability of new-age investment offerings (art and wine, for instance).

Go Green, beyond the currency. 

While financial returns will continue to occupy full attention, a growing segment of investors expects their wealth managers to know more about the current ESG issues and practices. ESG, or Environmental, Social, and Governance, is today’s direct result of rising consumer consciousness so that planet is seen as equal to profits, meaning equal to money and growth as equal to Green. In product design, fund allocation, and performance parameters, significant efforts in the wealth management industry show a considerable ESG influence. 

Final words. 

In a world that fights one variant after another, the power to do good and the ability to be good comes from the belief that customers are secure in their current material spheres and protected in their future goals. Wealth management has a direct and pivotal role in cementing that belief.

Never has there been a time in history when the industry has had a more significant power to change the future.


Top 5 Digital Transformation Challenges In Wealth Management

Top 5 Digital Transformation Challenges In Wealth Management

When it comes to meeting challenges, there are two truths. First, effective problem solving involves digging at the roots instead of hacking at the leaves. Second, a problem can’t be solved until we ask the right questions. So along with digital transformation challenges, let’s look at the dynamics that creates them, and ask questions that help us solve them.

How large is the AWM industry?

One PwC release talks about how with $110 T in assets (2020), the asset and wealth management (AWM) industry can quite literally shape a better future for investors, shareholders, the economy and the society. As one considers the growth projection of 5.6% YoY, and the resultant size of $147.4 T (2025), the enormity of it all sinks in.

Moving from ‘What-if’ to ‘What-is’.

For years now, AWM industry could have used benefits that fell off the pandemic. It is an odd statement to make (after all, no one wants an event of such scale and destruction). In the context of AWM digital transformation, wealth management systems primarily functioned with back-office support and on legacy platforms. The digital presence was limited. The anachronistic practice worked on one-to-one, product-led advisement. Not anymore. Consumers today discover products digitally and decide differently.

Technology undoubtedly is at the heart of the modernization, but successful wealth management transformations need to be customer-centric powered by scalable next-gen platforms.

With that caution, let’s get down to the top 5 digital transformations in AWM

  1. Managing the wired investor. Slow adaptation to demographic shifts.

No longer is the lucrative AWM segment made up of 50-year-olds. The segment sees a growing number of HNW millennials and women. A recent world wealth report posits that HNW clients are likely to transfer $68 trillion within 25 years to their heirs. Firms and technologies, as the study highlights, are neither prepared to manage expectations of new-age beneficiaries nor have a plan to arrest 80% of heirs that are likely to change financial advisors. For meeting the unprecedented scenario, both advisor experience and machine-learning approaches are necessary.

Transformation Trigger

Do your solutions fuse optimal elements from science-based advice (asset allocations, mutual funds selections etc.) with human-based advice (more complex needs – tax & asset planning etc.)?

  1. Rise of emotional analytics. AI-based wealth management.

In a client-advisor relationship, human emotions guide and reveal the most important component: trust. Even so, the same validated human behaviour AI technologies deployed in making autonomous vehicles and remote medicine, are enabling financial advisors to bring up best interest by detecting (and managing) client behaviours.

Transformation Trigger

For your AWM organization, what is the appetite for AI-based targeting and personalization initiatives through emotional analytics solutions?

  1. Behind the curve on Big Data and Analytics. Creating Insightful Personas.

Gauging real-time market sentiments, hyper-personalizing services, and providing for omni-channel customers who have several bank accounts, call for advanced analytics. AWM firms using simple analytics (MIS reporting systems) for mining customer insights, and assessing product penetration, are woefully behind in the digital transformation race.

Transformation Trigger

When it comes to Data Analytics, how much of time are you making for tracking business performance, client acquisition, sales & retention, and ultimately, client advice?

  1. Underutilizing the power of API’s. Growing reach.

AWM companies that are in a fast catch-up mode are prioritising their business tactics – calibrating clients, clearing out legacy systems, and rationalizing portfolios.

Success of these repair initiatives will however depend on how deep they engage with the ecosystem and equip workforce with newer capabilities.

Eventually, their growth narrative will have to face up to two imperatives:

  1. Bring in agility through platform customizations and
  2. Enable remote access that covers wider geographies

These two essential value-plays are fulfilled through API’s (application programming interfaces).

Transformation Trigger

For introducing new functionalities, sharing analytics with client, or even, for reducing costs, how well-versed is your wealth management company with ‘everything-API’?

  1. Embracing Digital Transformation at the core. Holistic goals-based advice.

While AWM organizations make investment in Data, Analytics, AI and other technologies, most fail to embrace it as a culture. There are exceptions though. Like the Toronto-based TD bank group’s program, called WealthACT. Today investment advice is largely commoditized for mass market offerings. Also, post-pandemic, the investing environment has grown uncertain and complicated. To combat this, leading AWM firms invest substantially to train employees on goals-based advisory frameworks.

The digital transformation challenge, however, comes from a lack of access to right tools and a maturity-approach that asks for a complete embrace of ‘digital as a culture’.

Transformation Trigger

In your AWM company, does the digital transformation programs specifically include skills for understanding emerging tech, and building empathy for the ‘new-wired’ customer?


Digitization will change Wealth Management: How will you keep pace?

Digitization will change Wealth Management: How will you keep pace?

The global wealth management market is expected to grow at a CAGR of 9% from 2021 to 2025. Wealth management firms are still recovering from the COVID-19 disruption.

Globally, Wealth Managers are looking for answers to a few pertinent questions:

  • How can you increase data accuracy levels through domain led data model?
  • How will Wealth Management firms balance employee safety and run a high-touch business?
  • What are the expected changes in customer behaviour? How will firms meet new needs?
  • What will be the nature of operational risk in this ‘new’ world?
  • Overall, how will digitization impact the wealth management business?

To seek answers, let us begin by examining a few dimensions.

  • Impact on the advisory business:The advisory business is poised to fundamentally change in the coming years. One of the key shifts is customers asking for personalized, data-driven advice. Wealth Management firms must consider the possibility of providing advisory as a subscription service. In doing so, customers expectations for a seamless personalized investment advisory can bear fruit.Next, advisory businesses will do well to shift to longer time horizons. As compared to shorter durations, this step will help customers achieve bite-sized investment goals. For example, a customer may want to invest certain corpus to generate returns enough to make down payment on a second home. For these types of requests, advisories should borrow from the success of fitness apps that enable users to achieve short-term goals by breaking down larger goals into more attainable steps.

    Thirdly, advisory firms will profit if they learn from the big technology companies that provide infrastructure and software. Many of such companies wield a significant footprint amongst a wealth manager’s clientele. Consequently, they hold significant customer behaviour data – a veritable gold mine.

  • Impact on the role of advisors:As Robo-advisory (digital platforms for communication and investment) gains favor, expect the role of an advisor to change.Also, in the decades ahead, the customer demographic is set for a significant churn, as millennials, women, and minorities start owning a larger chunk of wealth. As the landscape changes, so should the profile of wealth managers. Firms can prepare for this eventuality ahead of time.

    These ‘new’ wealth managers will have to bring a more integrated approach to their financial planning process. Beyond investments, they will have to broaden their expertise to include new-age financial products as customers seek assistance across health insurance, estate management etc.

  • Operational Risk:Wealth Management has traditionally been a ‘work-from-office’ business.The pandemic has changed this irrevocably. Today, it enables customers and wealth managers to connect remotely. This however brings in a new set of operational challenges. Apart from the investment risk, wealth managers must now focus on Business Continuity Planning (BCP), Cyber Risk and Reputational risks.

    A three stage set of normalization protocols is the need of the hour.

    The first order of business is to oversee both employees and customers safety. Even under these altered operating conditions, the focus undoubtedly must be on the consistent quality of service – one that enables customers to achieve their wealth goals.

    In the medium term, wealth managers must ensure the cultural change needed to sustain this new mode of operation is complemented by provisioning new policies and technology. This will include cybersecurity, and protection of customer data and the firm’s reputation.

    And, in the long run, firms must work with regulators to operationalise, standardise, and improve these controls.

  • Impact on customer behaviour:More than a few wealth management firms reported losing business during Pandemic citing lack of appropriate technology and tools. As the COVID drags longer than estimated, appetite for Robo-Advisory adoption has significantly increased. Historically, Wealth Management customers are the most risk averse (only a third of them prefer to invest in risky assets). Post Covid, it will not surprise if more customers seek less-risky assets.Also, younger clients are likely to move assets from existing wealth providers. This is because millennials are more receptive to digital platforms and also to new-age companies offering outcome-driven commission and fee plans. In the decade ahead, expect competition to heat up for the incumbents. They must make fundamental alterations to their business model to catch these customer-changing-demands.


To recap, the changing customer behaviour presents both – A challenge and an opportunity. To thrive in these momentous times, firms must invest more in Digital Transformation, Analytics, and be creative in reducing Operational risks.

Finally, Wealth Management Firms should draw inspiration from the words of Francis Bacon:

A wise man will make more opportunity than he finds!

Disclaimer – The original opinion piece has published on MEA Finance