Facilitator: Rod Bryson, TATA Consultancy Services Expert: James Holmes, SECCL
Headlines:
- The wealth management industry is poised for a $7 trillion generational wealth transfer, with 90% of heirs expected to change advisers
- Younger generations are demanding financial technology experiences akin to modern apps, requiring firms to modernise to retain clients
- Cost pressures are reshaping fee structures, with a forecasted reduction in total fees from 185 basis points to 85 basis points by 2030
- Personalisation is becoming a key focus, with a shift towards goal-based financial planning and client-centred advice
- Integration of legacy systems remains a challenge, with firms struggling to streamline software and platform compatibility
- Regulatory frameworks such as consumer duty are driving focus on customer outcomes, though their tangible effects on clients remain uncertain
- AI and advanced technologies are expected to revolutionise wealth management, offering opportunities for real-time feedback and enhanced client recommendations
Discussion points:
Generational Wealth Transfer
The session highlighted the $7 trillion expected to pass between generations, with most heirs likely to switch advisers. This presents a challenge for firms that must build long-term relationships with younger clients and modernise their services to meet their expectations.
Technological Adaptation
Younger clients are used to seamless financial experiences in apps like WANZO and Revolut. Participants discussed the critical need for wealth management firms to adapt to these expectations and provide tech-forward solutions that can attract and retain the next generation of clients.
Cost Pressures and Fee Structures
There is significant downward pressure on fees in the wealth management industry. The discussion covered the shift in fee structures, where platform fees are being absorbed into advisory fees, and a projection that total fees will decrease from 185 basis points to 85 basis points by 2030. This underscores the need for firms to innovate in order to remain competitive and profitable.
Personalised and Goal-Based Planning
A notable shift in client expectations is toward personalised, goal-based financial planning. Younger clients are particularly interested in tracking progress toward their financial goals, rather than just viewing their portfolio values. This requires wealth management firms to enhance their offerings with more customised, dynamic plans.
Integration Challenges
Delegates discussed the complexity of integrating various systems and platforms, especially in firms still reliant on legacy technologies. While some suggested a more open ecosystem approach, others recognised the challenges in consolidating diverse technologies while ensuring efficiency and client satisfaction.
Regulatory Impact
The impact of consumer duty regulations was explored, particularly their potential to improve customer outcomes. However, there was debate about whether these regulations are driving substantive improvements in service or merely mitigating risk for firms.
Future of AI and Personalised Services
The role of AI in wealth management emerged as a key topic. Delegates discussed how AI could enhance the client experience by offering real-time feedback, personalised recommendations, and more efficient service. However, the careful implementation of AI systems was emphasised to avoid potential risks such as data security and trust issues.
Key takeaways:
- Develop strategies to engage and retain clients during the generational wealth transfer by modernising services and focusing on long-term relationships with younger clients
- Invest in technology that aligns with younger clients' expectations for seamless, digital-first financial experiences
- Explore flexible fee structures, such as absorbing platform fees into advisory fees, to remain competitive in a cost-sensitive market
- Focus on personalised, goal-oriented financial planning to meet clients' evolving needs and preferences
- Address integration challenges by exploring open ecosystems and modernising legacy systems to improve platform compatibility
- Navigate regulatory changes with an eye on improving client outcomes, ensuring compliance, and fostering transparency
- Embrace AI and other advanced technologies thoughtfully, using them to improve client personalisation, service efficiency, and decision-making
