The Shift to Wealth Management 4.0 (PARTNER CONTENT)

Avatar photo
Lou Celi

Chief Executive & Founder

ESI ThoughtLab

The ongoing pandemic has been a watershed event for businesses and their customers around the world, particularly for the wealth and asset management industry. The crisis is heightening—and speeding up—digital, social, economic, demographic, and regulatory shifts that were already transforming the industry before the virus hit. But the ensuing health crisis has prompted investors to reexamine their life priorities, investment plans, and the way they interact with their wealth management providers.

These developments have pushed the fast-forward button on the digital transformation of the wealth industry and giving rise to the sector’s next phase: Wealth Management 4.0. To succeed in this next market incarnation, wealth and asset management providers will need to reconsider most aspects of their business, from go-to-market strategies and value propositions to products and services to augmented working and relationship management. Here are just a few of the megatrends that we see developing in the industry that wealth management providers will need to address:

1. Digital becomes the norm

Providers morph into digital-first businesses. AI, blockchain, omni-cloud, edge computing, and other emerging technologies drive high-speed change. Physical offices replaced by contactless customer experiences. Providers will need to speed up digital transformation programs to stay relevant.

2. Investors reset expectations

Investor expectations shift. Traditional cohorts lose relevance. The millennial mindset goes mainstream as the wealth transfer continues. Hyper-personalization becomes an imperative. Retirement challenges grow as does the demand for new sources of alpha in a low-interest environment.

3. The future of work is now

Work becomes more flexible and remote. Platforms and workflows go digital. Bionic advisors combine high-touch with high-tech to drive value. Ecosystems ensure success. Wealth advisors reconsider where they add value, how they get things done, and the best way to engage with their clients.

4. Firms rethink growth strategies

Fintechs go upstream and incumbents go downstream to find clients and build new business. Providers take advantage of divergent investor desires for consolidation and diversification with holistic and specialized services. Penetrating customer niches becomes an art form.

5. Social values drive decisions

COVID-19 is a wake-up call to invest for the common good. Social impact investing reaches new heights. Institutional trust moves beyond fiduciary responsibility. Providers build sustainability into their products, services, and value propositions, entering the debate on inclusive capitalism.

6. Value propositions and products morph

Investors become more apt to switch providers to get value. Fees fall under a brighter spotlight as fintechs create a floor and digitization drives costs down, while low interest rates require product innovation, such as democratized private equity offerings, to build alpha. New pricing models–from subscription fees to pay-as-you-go advice—shake up the industry as transparency becomes table stakes.

7. A new playing field is defined

Competition for business intensifies as the inter-generational wealth transfer, financial innovation, and industry consolidation gains momentum. Some firms evolve, others stumble. The industry splinters into scale and niche players, while fintechs grow and new entrants from adjacent industries, such as retail and insurance, jump into the fray. Platform models emerge, but who will own them?

8. The regulatory landscape shifts

Changing regulations and taxes disrupt investment strategies and service. The US sees higher taxes and tougher investment regulations, while Brexit shake up the industry in Europe and cloud UK’s future as a financial hub. Even the more open Asian market experience regulatory tightening.

For further information on the study, and how to participate, please contact Lou Celi at or Barry Rutizer, at .

To understand these trends and their impact on the wealth industry, ESI ThoughtLab is currently working with a coalition of leading organizations on a major research project, Wealth and Asset Management 4.0: How digital, social, and economic shifts will transform the investment industry. The research will use a blend of quantitative and qualitative research, including a survey of 2,500 worldwide investors and 500 cross-industry wealth and asset management firms.

We are inviting a small number of firms to sponsor the research project. The exclusive sponsorship includes contribution to the research questions, full access to the research findings, and company branding in the published report.

For further information on the research report, and how to participate, please click here.