The COVID-19 pandemic has reshaped investor views and how the wealth and asset management industry responds to these changes. To understand the shifting needs of investors around the world and how well wealth management providers are meeting those needs and expectations, ThoughtLab conducted a survey of 2,325 investors across wealth levels, age, gender, and geographic location. The program also surveyed 500 wealth and asset management providers globally.
Wealth and Asset Management 4.0, the just-completed study, revealed the shifts taking place in the following areas:
- Investments:The pandemic made risk mitigation a top goal for half of investors and prompted about 4 out of 10 investors to include family members in more wealth decisions and to turn their attention to active investing and holistic financial planning. Greater attention to social issues during the health crisis also made 20% of investors keen to invest for the social good.
- Relationships: About a quarter of investors reported fractured relationships with their advisors due to inadequate personal service. To mitigate risks, 27% of investors distributed accounts to more firms; among billionaires, it was almost twice that number. The trend will continue, with 4 in 10 investors expecting to move money to another firm within the next two years.
- Digital interaction: The pandemic made digital access a higher priority for 40% of investors and put 30% more at ease working through video and digital tools. In the next two years, most investor interactions with advisors will be through digital channels: almost 9 in 10 say they prefer to engage through mobile apps. But they also expect to do more face-to-face.
- Products and services: More than two-thirds of investors plan to put money in alternative investments over the next two years, and many more will invest in other specialized products such as IPOs, tax-exempt instruments, and ESG funds. Many also plan to seek personalized planning and holistic advice and draw on non-investment services like insurance, tax advice, and loans.
- Fees: With more time to spend on investing during the pandemic, about a third of investors reevaluated what they pay. Fewer than 4 out of 10 investors are happy with their wealth management firms’ fees and pricing structures. Yet only about a third understand how their advisors are compensated.
Wealth management firms are coming to grips with the impact of the pandemic and other trends. “We are living through a period of disruption that will ultimately redefine the financial services industry. Not only has COVID accelerated digital transformation, but it has also heightened environmental concerns and awareness of social justice, equality, and inclusion. These personally held beliefs can no longer be kept distinct from business,” says Melissa Cullen, Global Head of Strategy, Wealth and Retirement with FIS, one of the research program’s sponsors.
To succeed in this new marketplace, wealth and asset management firms will need to revise their thinking about customers and take a more personalized, wide-ranging, and transparent approach to meeting their needs.
“Our study shows that the smartest wealth management providers will not just democratize their products and services, but also their views about investors,” says Lou Celi, the CEO of ThoughtLab and the research program’s director.
An eBook with the results from both surveys will be released in November. For further updates on the program and to access the analysis, please visit https://thoughtlabgroup.com/wealth-management-4/.