We expect the next year to see a continuation of long-term shifts in the wealth management landscape, some of which are not unlike those we are seeing in the banking and finance industry more generally.
Operationally, greater integration of technology to improve the client experience will continue to be a key focus for wealth management firms. This is with the view to not only to respond to the demands of a younger, always-on, client base, but also to augment the role of relationship managers to give them the tools to better service their clients regardless of where they are.
Continued demographic diversification in the client base is another key trend that the industry will need to continue to adjust to. The pace of wealth accumulation among millennials and women of all generations will continue to increase as a result of the boom in tech-driven innovation.
This creates significant demand for wealth management advice and wealth preservation strategies, presenting a significant opportunity for wealth managers who can offer bespoke wealth management services to meet their needs, as well as, in turn, diversify their own workforce to be better aligned with the changing client demographics.
Another trend concerns the fact that life expectancy continues to increase, and families will find three and, in some instances, even four generations of family members alive at the same time, with newer members becoming successful entrepreneurs themselves in their own right.
Against this backdrop, independent advice and the ability to manage and represent often diverse interests while preserving the family’s legacy, will require wealth managers to create structures which will help families navigate that complexity in an environment that fosters collaboration between the different generations.
Finally, from a client perspective, I believe that there will be continued momentum throughout 2020 towards increasingly incorporating Environmental, Social and Government (ESG factors) into portfolios, with the aim to both protect and enhance returns for the long term.
From an investment perspective, the industry’s biggest challenge and opportunity in 2020 will be to navigate the macroeconomic environment which continues to be categorised as ‘uncharted territory’.
We expect central banks’ 2019 accommodative monetary policies, as well as some additional fiscal stimulus, can keep most developed economies growing through 2020 and probably longer, continuing to support growth in corporate earnings, dividends and buybacks, though wealth managers should be cautious of inflationary pressures on over-exposure to stocks.
A well-balanced global investment portfolio should help clients avoid complacency. Furthermore, continued persistence of low interest rates means that the search for yield becomes even more important, with clients increasingly hungry for insights and ideas which will help them deploy capital effectively.
Wealth managers who are part of large global universal banks and thus have relationships across public and private capital markets will have an opportunity to become even more relevant to their clients in 2020.
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