How Wealth Management May Look 20 Years from Today

How Wealth Management May Look 20 Years from Today

A Global Wealth survey by Boston Consulting Group that was conducted in 2020 suggests a very different wealth management landscape in the next 20 years.1

To understand just how profound these changes may be, consider that wealth management has been predominantly about meeting the needs of a singular market demographic—male, middle age and white. The future, already emerging, is much more diverse in which women’s wealth grows faster than men’s and newer generations of investors are more educated, economically empowered and technologically savvier.

Rising to Meet the Challenge

Winners in this developing future will be wealth management firms and financial advisors who can evolve to meet the needs and expectations of an entirely different investor class by application of four key practices.

  1. Digitizing interactions to humanizing them.
    New fintech entrants like Robinhood or Betterment reflect the emergence of robots, artificial intelligence and big data. Yes, technology will do many of the routine activities that advisors do today, but the demand for individualized attention and insight will grow. Technology becomes table stakes, but it’s human judgment, creativity and empathy that Boston Consulting Group believes are the only things that can establish a trust-based relationship.
  2. From off-the shelf to custom solutions.
    Machine learning will allow wealth managers to anticipate client needs and solutions before they even present themselves. Rather than providing a large menu of product choices, wealth managers will be able to provide a carefully curated list of options that best fit the needs and goals of the client.
  3. From boring to fun.
    Investments will require a narrative that addresses the dual desires for performance and purpose. The future investor will want his or her investments to effect positive change, according to their values and interests, and provide an emotional connection that few mature investors crave today.
  4. Focusing on the relationship.
    Asset-based pricing may come under pressure as investors begin to question why they pay more in fees simply because they have more assets when the level of service received is the same. In response, advisors may move to a value-based pricing model that blends a mix of asset-based fees, performance-based pricing and fixed-fee models unlinked to assets under management.

As a wise man once observed “Prognostication is hard, especially about the future.” But, there is no escaping the reality that the wealth management space is changing and advisors looking to thrive or maintain the value of their business will need to think how to evolve with it.




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