Welcome back to the continuation of our exploration into the future of wealth management in 2024. In this segment, we delve deeper into the trends that are reshaping the industry’s landscape. From the surge in sustainable investing to the transformative impact of big data analytics, each trend marks a significant stride in the evolution of wealth management strategies and client interactions.
As the financial world undergoes rapid transformations driven by technological innovations and changing client preferences, it becomes increasingly imperative for wealth management firms to adapt. Join us as we uncover the second half of the top trends that are steering the course of wealth management in 2024.
- Rise of AI & Robotic Process Automation (RPA)
Wealth management is embracing efficiency through AI and RPA, enabling faster operations with fewer resources. The global AI software market is poised for significant growth, reaching USD $126 billion by 2025., while Gartner forecasts a shift from piloting to operationalizing AI in 75% of organizations by 2024.
RPA focuses on automating routine tasks, enhancing operational speed and accuracy. Repetitive activities like retrieving statements, archiving files, and dispatching reports can be automated through RPA.
- Surge in Sustainable Investing Inflows
Modern investors consider more than mere profits when deciding where to invest. They are increasingly considering environmental, social, and governance (ESG) factors in their investment decisions. The ESG assets are projected to surpass $53 trillion by 2025, signifying a significant shift toward sustainable investing. However, challenges persist in measuring ESG impact and combating “greenwashing.”
- Sustainable and Socially Responsible Investing (SRI) Gains Traction
The demand for investment options aligning with social and environmental values is on the rise. While promoting positive change, SRI faces challenges such as limited options, performance concerns, and higher fees, necessitating ongoing research and transparency in strategy.
- Retiring Advisors Drive Recruitment Pressure
A considerable number of financial advisors are set to retire, necessitating recruitment to maintain service levels. Data forecasts indicate that over the next decade, up to 103,000 current financial advisors, accounting for 40% of the total, will retire. The industry seeks younger, diverse talent adept in adopting new technologies. Firms are focusing on succession plans and recruitment strategies to bridge the advisor gap.
- Digital Transformation Reshapes Client Interactions
Digital capabilities are reshaping client engagement in wealth management. Firms are prioritizing digital channels, with mobile apps becoming the preferred medium for investment-related activities. Over 85% of firms regard employing digital capabilities to serve clients as an immensely crucial objective. Multinational investment bank UBS introduced the My Way tool, investing $2.65 billion to offer investors a remote digital experience encompassing onboarding, insights, and connections to advisors via WeChat and WhatsApp. The tool generated $3.7 billion in its inaugural year and could potentially attract up to $30 billion in the following year.
The future of wealth management is a tapestry woven with technological advancements, evolving client preferences, and industry shifts. The trends highlighted in this exploration merely scratch the surface of a dynamic and evolving landscape. They serve as guideposts for wealth managers navigating this ever-changing terrain, emphasizing adaptability, innovation, and client-centric approaches. As we conclude this journey through the trends of wealth management in 2024, may these insights pave the way for informed strategies and dynamic client interactions in the years to come.