Interview

ThoughtLab recently released its latest future-ready cities study, called “From Future Vision to Urban Reality.” As part of the research, we asked urban experts and research sponsors a series of questions about some of the actions cities need to take to become better prepared for the future, especially across specific urban domains. Below are some of their insights. 

• What do city leaders need to do/what concrete actions do they need to take to implement their future vision for their cities? 

Abdo Al Habr, Senior Managing Director, FTI Consulting. City leaders should focus on two main levers to drive the realization of their future vision. First, secure the required resources to implement change, as plans and ambitions are often halted when faced by the reality of city budgets and funding constraints. To secure the required resources, leaders should explore innovative partnership models to engage non-governmental stakeholders (e.g., private sector, NGOs) early on to diversify sources of funding. Second, leaders should put in place rigorous governance to ensure efficient deployment of resources, which in turn encourages broader participation of stakeholders. 

Jessica Constantinidis, Innovation Officer, EMEA, ServiceNow. Being successful in implementing a future vision for your city is not one action or a list of actions. It’s a mental shift. That shift is even more important than the technology you invest in. When I think about what the most advanced cities have in common, I see that they approach challenges with a holistic mindset, not as one-off projects. That’s difficult for a lot of cities because they don’t know next year’s budget, whether they’ve chosen the right technology, or even if they have picked the right problems to tackle. However, cities set themselves up for success by being comfortable with the uncertainty innovation brings and making constant evaluation a foundational part of the process. 

So how can cities shift how they think about the future? 

1. Don’t jump straight to solutioning. Cities should start by asking themselves “what is the art of the possible of what we are trying to achieve? instead of ‘what do we think the solution is?’ The most impactful, efficient, and sustainable answer may not be the obvious one.  

1. Make data the single source of truth and insight. Cities need to understand what data they have access to and how they can analyze that data to get the most value. They also need to address data protection, security, and sovereignty, and collaborate with data owners or have joint data ownership.  

1. Prioritize agility. Cities need to be capable of adjustment and modification. They need to be able to pivot quickly. If you rigidly stick with a single strategy, by the time you finish your initiative, your solution will be outdated.  

1. Break down silos. If you automate in silos, you miss the opportunity to deliver the city of the future. Everything is connected—from your find-your-way app, to roadwork updates, to changes in traffic patterns because of school holidays. There is the potential to fit it all together and provide better, safer experiences if you take a holistic approach.  

1. Collaborate to drive change. Cities can’t do it on their own. It needs to become every person’s responsibility to take care of the city, and technology can be an enabler, making it easier to proactively bring people together. To take advantage of this opportunity, leaders need to innovate in partnership with the people who live in their communities, with businesses, with academic institutions, and beyond. They need to work across the whole ecosystem of commercial, non-profit, and public sectors to make a better world.  

Andrea Sorri and Anders Grafström, Segment Development Manager and End Customer Marketing Manager, Axis Communications. City authorities need to create their own roadmap across functions, stakeholders, and others of interest in their city. The leaders of today should think about the roadmap for the leaders of tomorrow. They should be forward-thinking—think scalable and future-proof. A step-by-step approach is a good way to make the road map come true. 

Cities should work cross-functionally for better collaboration, but also for sharing costs in mutual investments in cameras, sensors, and IoT devices. They should speed up their digital twins’ programs to be able to do simulations for climate impact and impacts on more citizens. They need to secure good real data to use as a base to train their AI for their digital twins—something that can be provided by cameras and other smart sensors. The simulations will help cities invest in the right physical changes and use their resources in the best possible way. Cities should invest smartly in systems that can cater for needs to keep people safe and secure as well as manage traffic and monitor the environment at the same time. 

Petro Olenych, Deputy Mayor and Chief Digital Transformation Officer, Kyiv City Council. City leaders must establish frameworks that build resilience and sustainable growth. For Kyiv, this means guiding post-war recovery through collaboration with international partners and local communities. The focus must be on securing critical infrastructure and enhancing emergency response systems, and on ensuring operability of physical ecosystems. Kyiv Digital plays a key role in engaging citizens, while a well-defined governance model and the careful selection of digital tools will ensure the city’s future-readiness. 

Dr. Joan E. Ricart, Professor, IESE Business School, Spain. Future-ready cities are (1) human-centric; (2) diversified in funding; (3) reliant on partnerships; and (4) able to leverage digital technologies. But they do even more in two areas that represent a big step for future-ready cities.  

First, they move partnerships to the next level. The challenges cities face require very complex and novel partnerships as they mostly deal with difficult problems that require many diverse stakeholders in the development of solutions. Cities are used to partnerships, but mostly through purchasing contracts and infrastructure investment. The partnerships needed today are complex innovation ecosystems to deal with big challenges. Second, they move, propelled by artificial intelligence, to a new level of technology employment, with broad use of digital twins to help simulate the impact of possible solutions to challenges, facilitating the development of the right solutions. 

• What are your views on the steps cities should take to make sure the following key urban domains are future-ready?  

Environment and sustainability. Our study shows that a quarter of cities are already falling behind their net-zero goals, which become progressively more challenging to meet over time. What should cities do to ensure they meet or exceed their decarbonization goals?  

Andrea Sorri and Anders Grafström, Segment Development Manager and End Customer Marketing Manager, Axis Communications. As urbanization continues and cities grow, the challenge to reach decarbonization and net-zero goals gets tougher. There is not just one single thing cities need to do—it must be in the culture and values of a city to be applied in all parts of the city organization. But there are some actions that can matter more. Traffic is a big contributor to carbonization and air pollution. So, working on improving traffic flow through better traffic management and improved parking management can do a lot. Big and small actions matter. It is the sum of all actions that will lead cities to their goals. Cities should deploy technology that is environmentally friendly, PVC-free, energy efficient, and with long-lasting quality. For all connected devices and solutions, smart use of bandwidth can do a lot to help use the infrastructure in a responsible way and also help cities to not store more data than needed in energy-consuming servers. 

Petro Olenych, Deputy Mayor and Chief Digital Transformation Officer, Kyiv City Council. Kyiv is laying the groundwork for its transition to carbon neutrality through the Kyiv Sustainable Energy Blueprint Initiative, which aims to establish strategic plans such as the Carbon Neutral Roadmap and EV Network Plan. While actual implementation is yet to begin, the city is actively preparing to meet FAST-Infra Label standards, ensuring future investments align with sustainable development. Kyiv is also considering scaling successful global initiatives such as Breathe Cities by C40 Cities and Bloomberg Philanthropies 

Abdo Al Habr, Senior Managing Director, FTI Consulting. We have seen many national and local governments, including most recently GCC countries and cities, set “green” agendas and new environmental and sustainability policies. While these efforts outline ambitious targets, they often face difficulties at the implementation stage. Common obstacles include government bureaucracies and resistance from private players. To overcome these challenges and meet decarbonization targets, a more participatory governance framework is required to secure buy-in and encourage active participation, as well as prioritization, together with relevant stakeholders, of high-impact policies that minimize disruption yet ensure a gradual and steady transformation. 

Mobility and transportation. What will people- and planet-centric mobility look like in cities by the end of the decade? What will cities need to do to deliver on the future of urban mobility?  

Petro Olenych, Deputy Mayor and Chief Digital Transformation Officer, Kyiv City Council. Kyiv is on the path to creating a seamless, future-focused transportation system. Incorporating electric vehicle infrastructure and integrating it into the Green Action Plan by the EBRD is a priority. The city is also shifting towards integrated ticketing through mobility as a service (MaaS), ensuring easy, efficient movement for everyone. 

Abdo Al Habr, Senior Managing Director, FTI Consulting. As cities reshape their ambitions and future visions, mobility stands at the center of reimagining urban life. A more inclusive and sustainable urban mobility framework has emerged and continues to expand across cities worldwide with a focus on improving walkability, providing dedicated cycling lanes, and further integrating micro-mobility solutions to both replace and complement legacy mass public transit alternatives. These measures will become even more efficient and convenient with the growing integration of digital platforms that provide real-time updates and personalized mobility solutions. 

To deliver on the future of urban mobility, cities will need to continue integrating these solutions into their urban and spatial planning efforts and adapt the legacy infrastructure to fit with the new framework. In addition, cities should ensure new mobility solutions are well integrated and put forward regulatory frameworks incentivizing complementarity and coordination, as well as ensuring coexistence with traditional or legacy solutions. 

Andrea Sorri and Anders Grafström, Segment Development Manager and End Customer Marketing Manager, Axis Communications. For urban mobility cities can do a lot. By collecting traffic and people movement data, cities will get actionable insights for their everyday traffic management as well as their future planning. The data can also be used to fuel digital twins with accurate data for AI simulation and for verification of simulated solutions. Smart cameras are great at collecting data for traffic management and planning. 

• Urban infrastructure. How will cities need to rethink their physical and digital infrastructure—and bring them together—to make sure it is fit for future purpose, i.e. able to meet the needs of both citizens and businesses? 

Jessica Constantinidis, Innovation Officer, EMEA, ServiceNow. When it comes to urban infrastructure, I see a need to reinvent how we define a city. Traditionally, cities are viewed in two dimensions—flat space carved into specific areas where people live, work, and play. What if we turned that notion on its head and said we want everything residents need to be accessible within five minutes? That is exactly what NEOM in Saudi Arabia is doing. This community, built with the intention of being people-first and environment-friendly, is blending residential, commercial, and leisure areas, giving everyone access to the resources they need to thrive.  

To achieve that vision, we need to evolve to a three-dimensional view where you maximize all of the space your city has to offer. Urban infrastructure can be layered with dedicated space for transport vehicles below, then bicycles, then pedestrians on top, and drone or air traffic above. To get where you need to go most efficiently, you can connect between these layers. It will require planning and innovation to realize that future, and technology has the potential to make this vision possible.  

Abdo Al Habr, Senior Managing Director, FTI Consulting. Cities around the world have been taking measures to integrate digital and physical infrastructure, with the application of new technologies in multiple areas leading to improvements in quality of life, sustainability, and community engagement. As technology continues to advance, cities have the opportunity to break away from traditional urban and city planning, which is focused on marginal improvements, and rather focus on reimagining the future of urban life, harnessing the power of fully integrated digital and physical infrastructures. 

Petro Olenych, Deputy Mayor and Chief Digital Transformation Officer, Kyiv City Council. Kyiv’s recovery efforts aim for a future where physical and digital infrastructure work together. By embracing smart governance and embedding cybersecurity into its critical systems, Kyiv is creating an infrastructure that’s not just built to last but built to adapt. The city is considering external technical assistance to pilot the Advanced Infrastructure Assessment Initiative using muon FLUX technology for non-destructive testing of key infrastructure, starting with the city bridge. 

• Safety, security, and resilience. Our research revealed that many cities are not well prepared to overcome today’s city challenges nor weather future shocks and risks, from cyberattacks to extreme weather events. What must cities do to keep citizens safe and secure and ensure resilience? 

Andrea Sorri and Anders Grafström, Segment Development Manager and End Customer Marketing Manager, Axis Communications. Cities will need to implement proper early-warning systems with smart sensors to be able to react as quickly as possible. These systems can also be further developed by AI-simulations and digital twins. With flooding, water, and pollution sensors, cybersecurity is very important to prevent false alarms caused by hackers. So, invest in long-term cybersecure and reliable solutions.  

Petro Olenych, Deputy Mayor and Chief Digital Transformation Officer, Kyiv City Council. In a world where security threats can come from anywhere—whether physical or digital—Kyiv is advancing its Incident Command System (ICS) and leveraging AI for real-time threat monitoring. With a firm grip on cybersecurity and citizen safety, Kyiv is preparing itself for whatever challenges may arise. 

Abdo Al Habr, Senior Managing Director, FTI Consulting. The success of a city’s emergency response depends on its ability to detect risks, its preparedness to handle them, and its capacity for recovery. To succeed in these areas, cities need thorough planning and, crucially, stronger collaboration among diverse stakeholders. At present, few cities have comprehensive early-warning systems that actively involve citizens during crises. Moreover, while many cities are improving emergency preparedness, these efforts are often siloed within specific sectors, with limited interoperability across systems, which hampers effective collaboration during emergencies. 

• Citizen health, equity, and trust. Public health, income equity, homelessness, and trust are persistent urban challenges, made only more difficult by the urban influx of refugees and immigrants. What are the most effective ways for cities to overcome these challenges and become truly human-centric?    

Petro Olenych, Deputy Mayor and Chief Digital Transformation Officer, Kyiv City Council. Kyiv knows that equitable access to services is essential for a thriving city. The veteran services portal (Defender.Kyivcity) is just one example of how the city provides essential services to those who need them most. Furthermore, by prioritizing the development of its digital services strategy and mental health interventions, Kyiv is ensuring that everyone has the support they need, especially in times of crisis. 

In the ever-evolving landscape of urban development, artificial intelligence (AI) has emerged as a transformative force, promising unparalleled advancements in smart city planning and management. Cities are now setting up AI policies and exploring a myriad of AI use cases across urban domains, from optimizing traffic flows and minimizing carbon footprints to enhancing public safety and healthcare services. As part of ThoughtLab’s new study on how cities are becoming future ready, called “From Future Vision to Urban Reality,” we asked a series of questions related to AI usage to our research sponsors, advisors, and smart city experts. Below are their insights. 

 

1. What role will AI play in the city of the future? What is your vision for an AI-empowered city?

William D. Eggers, Executive Director, Deloitte Center for Government Insights. AI will be a key component of future cities—creating more efficiency, improving public services, and increasing mission impact. AI can enable more tailored, fast interactions with residents and businesses, as well as real-time information. However, trust is essential for AI-enabled transformation. Cities must make sure their AI systems embody fairness, transparency, and impartiality, minimizing potential risks. 

Miguel Eiras Antunes, Global Smart Cities & Urban Transformation Leader, Deloitte. Cities are adopting automated processes and operations and following data-driven planning approaches. Using AI,  technology-powered infrastructure supports cities in automating operations, creating efficiencies, solving problems, and delivering better services. While AI chat assistants are common, cities will evolve to digital platforms as “city brains” to orchestrate urban activity, provide event correlation, root cause analysis, predictive analytics, incident management, and operational insights. With anonymized citizen data and 5G technology, maximizing data value and improving decision-making with AI and analytics will be crucial for developing cognitive cities.  

Peter Pirnejad, City Manager, Los Altos Hills, CA. We started by training our team on the basics of AI. We then created an AI Use Policy and then did more intermediate training. We are using AI in two ways. More generally as an assistant or aid with tools such as ChatGPT and Copilot. In addition, we use it with AI-enabled applications that span a range of areas such as license plate readers for public safety and content creation in Constant Contact. AI is an essential and growing tool in both direct and indirect applications of every aspect of local government. 

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. Kyiv currently manages public transport schedules and sends emergency alerts like air raid warnings and energy downtime, showcasing the importance of real-time data processing. AI can further improve other systems with predictive maintenance for infrastructure, dynamic traffic light management, and adaptive public services. 

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. The biggest advantage of AI is in the development of future scenarios for the city’s infrastructure, behavior analysis of the citizens living in the city, and insights into the territorial expansion of the city. Another application is the work with different databases in the city, such as those related to video monitoring systems, water/energy/food supply monitoring, etc., and how to merge them and develop data correlation analysis. 

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. AI could become the backbone of urban infrastructure, optimizing everything from traffic flow to energy consumption. In our vision, an AI-empowered city will integrate seamlessly systems that communicate and adapt in real time to enhance quality of life, efficiency, and sustainability. Such a city will leverage AI to provide personalized public services, predictive maintenance for infrastructure, and enhanced public safety. 

Bob Leek, CIO, Clark Country, Nevada. I see AI as a “how” and not a “what.”  For a large county like ours, the ability to take large unstructured data archives and extract and gain insights from them will inform the design and evaluation of programs as well as every aspect of the services we provide to the public. For years, the promise of data architecture and building with the end in mind always seemed to be very hard to execute upon, usually resulting in disappointment. Now, we can take these tools and gain insights in a way we’ve always wanted to be able to do. 

Øyvind Tanum, Head of Smart City, Trondheim, Norway. In order to develop Trondheim as a smart and sustainable city, the use of data and AI is crucial. We are exploring different pathways to utilize the potential of AI, including but not limited to developing data fabrics, predicting mobility patterns, predicting sick leave in the health sector, measuring air quality, predicting road maintenance, and engaging with citizens and integrating large language models where it makes sense.  

Jerry Power, Co-founder, i3-iot. There is a big opportunity for AI in cities. Cities have relatively fixed budgets determined by their tax base AND a growing demand for technology to improve operations. The name of the game for cities is and will continue to be “doing more with less.” AI has the ability to help cities do that. However, cities are not companies. Cities have to operate transparently, and they have to be able to protect the privacy of their constituents. Unless these civic needs are met, citizens will reject efforts to deploy AI at the peril of elected officials. That is the biggest AI challenge for cities; it is not the technology itself but gaining civic acceptance.” 

 

2. What do you see as the main benefits of the use of AI in cities? How will it help cities to become future ready, i.e., resilient, sustainable, efficient, and digitally enabled? 

Peter Pirnejad, City Manager, Los Altos Hills, CA. AI is a tool like any other. It expands, accelerates, and augments human effort. Whether we use it to respond to common questions, create background information and inspirational context to build on, or to extend our abilities with translation and dictation applications, the limits are endless. 

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. AI increases resilience by predicting natural disasters, optimizes resource use, and enhances sustainability. It supports digital enablement through use with other technologies like digital twins for urban planning and IoT for smart buildings. Additionally, AI boosts public safety through integration with emergency response systems and monitors environmental conditions via sensors and analytics. 

Andrea Sorri, Segment Development Manager, Smart Cities – EMEA, Axis Communications. AI can be a way for cities to improve big data management. AI can enable data analysis in a smart way, for making  quicker and better fact-based decisions. Cities can mitigate the risk of the scarcity of data analysts by using AI. The intelligence can be built into products/devices doing the initial analysis on the edge and only sending relevant data forward (thereby saving data storage and transfer). 

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. Cities must be prepared for different scenarios of climate change, local disasters, geopolitical crises, and other disruptions. AI could differentiate pessimistic, real, and optimistic scenarios and anticipate consequences not only in one month or one year, but also decades. Based on this, a municipality could plan the budget and resources needed; customize territorial development master plans of the city; anticipate and influence local residents’ behavior; and provide new adapted services, such as new transport, utility, and entertainment infrastructure. But to enable this, the city government will have to use new data sources, like GPS, video cameras, and telecommunications data, on one platform in order to track seasonal and situational differences. 

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. There are multiple benefits including improved resource management, enhanced public services, and increased operational efficiency. AI can help cities predict and mitigate risks, optimize energy usage, and streamline transportation systems. This will lead to more resilient, sustainable, and efficient urban environments that are digitally enabled and capable of adapting to changing needs and circumstances. 

Øyvind Tanum, Head of Smart City, Trondheim, Norway. If used in a smart way, AI will enable cities to make better and faster decisions and in general tackle greater complexity and amount of information. 

Jean Barroca, Global Public Sector Digital Modernization Leader, Deloitte. AI has the power to catapult cities into the future. By leveraging data-driven insights, AI can revolutionize urban planning and resource management, from predicting trends and managing traffic to planning infrastructure, making cities more resilient and sustainable. AI’s role in energy optimization and traffic reduction, for example,  underscores its contribution to sustainable living. As we weave AI with cloud computing and IoT, we’re not just creating connected cities, but equipping them to tackle complex issues like climate change. The result? A smarter, future-ready urban landscape that elevates the quality of life for all residents.  

 

3. What do you see as the most effective AI use cases for cities? Can you provide any specific examples of how a city is successfully using AI today?  

Andrea Sorri, Segment Development Manager, Smart Cities – EMEA, Axis Communications. Today cities use AI for forensic search and traffic optimization. With the use of AI, hours of video can be searched for forensic evidence in just minutes, saving time and resources and improving accuracy. Through AI analysis of traffic information, traffic authorities can understand why congestion and flows and can better steer traffic and traffic lights for an optimized real-time traffic flow. It can also add value for environmental analysis when collecting data about weather, flooding, pollution, and more. 

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. Some uses include AI video surveillance systems; prediction of payments activities through online transactions; and monitoring of migration flows inside the city in different periods in order to plan for any overload of city infrastructure. Almaty city is using AI in all of these ways. 

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. The opportunities for AI use in cities are endless. AI can transform urban environments through smart traffic management, waste reduction, energy optimization, enhanced public safety, and much more. An example is the clerk’s office of San Jose in California, which has implemented an AI-powered translation platform. This platform provides real-time translation and captions to mobile phones, computers, and video displays, allowing non-English speakers (about 40% of its population) to participate in city governance. This initiative, produced by Wordly, demonstrates AI’s ability to make city services more inclusive and accessible, ensuring all residents can engage fully with their community. 

Bob Leek, CIO, Clark Country, Nevada. We have a number of use cases underway. The most promising ones are to free up all of the services through an evolved version of a chatbot using a digital assistant and to apply translation services to most aspects of the work that we do, including document translation and real-time translation services for in-person interaction with the public that comes to our locations. 

Øyvind Tanum, Head of Smart City, Trondheim, Norway. One specific use case is that we probably save two million Euros a year by using AI to calculate and collect real estate tax. We use AI to analyze and categorize citizen engagement processes, including linking it to the UN Sustainable Development Goals and local political objectives. 

Miguel Eiras Antunes, Global Smart Cities & Urban Transformation Leader, Deloitte. Cities globally are harnessing AI’s power to refine operations, enhance safety, and amplify efficiency. Integration of advanced technologies like UAVs, real-time video analytics, and biometric systems allows cities to optimize functions spanning security, emergency response, and public event management. 

In the US, for example, cities are improving efficiency by tracking snowplows and street sweepers in real time. Embedding sensors in vehicles for data collection on location, road conditions, and effectiveness enables better fleet management. When this data is merged with social media feeds, traffic reports, and doppler radar via cloud-based technology, it empowers city managers to make superior, prompt decisions on truck routing and positioning. 

Peter Pirnejad, City Manager, Los Altos Hills, CA. There are too many use cases to speak of. I provide training in this area to cities across the US. Some direct examples include Hamlet for translation of video to actionable minutes, Citibot for the use of a knowledgebase to answer questions, and Flock Safety to detect and analyze license plate and car makes against a database of known suspects.  

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. Effective AI use cases include traffic management with AI-driven lights to reduce congestion, as seen in Istanbul. Public safety is enhanced through predictive policing and command and control (C2) systems for situational awareness, as utilized in Los Angeles. Waste management benefits from optimized collection routes and AI-powered sorting robots are seen in Seoul. AI aids infrastructure maintenance by reducing downtime and improving reliability, with Valencia using AI to analyze road conditions and schedule repairs. Environmental monitoring to manage pollution and resource consumption is demonstrated in Paris, where sensors and AI analytics are used. Additionally, AI can advance e-democracy and public budgeting by analyzing citizen feedback, predicting trends, and facilitating transparent decision-making processes. 

 

4. How are cities using generative AI (a type of AI that generates content and ideas from large sets of data) to help achieve their urban goals? Which use cases for Gen AI do you think will provide the most value for cities?  

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. A master plan is the most important instrument for the city government. When a city grows naturally without supervision, a lot of problems will occur, like non-balanced migration that can have an impact on transport infrastructure and social infrastructure (such as hospitals, clinics, schools, universities, libraries, public places, etc.). Historically, a master plan has been developed only from the perspective of certain people in the city. But “big data” analysis with Gen AI support will change the whole way that a city is managed. The idea is to have a master plan with decision support from data and Gen AI.  

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. Cities use generative AI to design more efficient infrastructure, create predictive models for urban planning, and enhance citizen engagement through personalized services. The most valuable use cases include automated urban design, dynamic simulation of city development scenarios, and real-time generation of public information tailored to individual needs. 

Bob Leek, CIO, Clark Country, Nevada. I think that the use of Gen AI will start with low-hanging fruit informed by success stories from jurisdictions that use Gen AI in their creation of solutions, services, and improvements. I also think there will be a number of less-than-successful attempts, and jurisdictions will benefit from hearing about and learning from those, maybe even more so than the successful ones. 

Jean Barroca, Global Public Sector Digital Modernization Leader, Deloitte. Generative AI holds the potential to revolutionize city operations and citizen services. Its applications range from chatbots and virtual assistants providing swift access to government services, to optimizing city operations through data analysis. This advanced form of AI goes beyond traditional natural language processing, delivering accurate, context-aware responses that enhance citizen interaction.  

One of the key benefits of generative AI is its capacity to analyze data and highlight areas for improvement. Consider a Deloitte task analysis that revealed US federal workers spend over 1.1 billion hours annually on tasks like documentation and compliance. Similar trends likely exist at the city level, suggesting a substantial opportunity for process enhancement. Our research indicates that AI could augment 85% of such tasks, heralding a transformative shift in government functioning that boosts efficiency and reimagines citizen engagement. 

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. Generative AI helps optimize urban planning by evaluating scenarios, creates personalized public services, and automates procurement document preparation. It aligns municipal legislation with current needs, aids contracting by summarizing RFPs/RFIs, and automates HR processes by vetting candidates. Generative AI also connects to data lakes and APIs, enabling real-time data access for advanced decision-making. 

Peter Pirnejad, City Manager, Los Altos Hills, CA. The most readily available and widely used use case is  chatbots that use a large language model powered by locally controlled and curated knowledge like a website or knowledge base. 

Andrea Sorri, Segment Development Manager, Smart Cities – EMEA, Axis Communications. Gen AI could be used to create textual descriptions of video streams that can be stored as another data layer to be of use for effective search of information or for automatically creating reports on, for example, people movement, traffic flow, or air quality in the city. 

 

5. How are cities employing AI with other technologies—such as modern cloud-based IT platforms, IoT, blockchain, and digital twins—to create a future-ready city?  

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. Cities integrate AI with cloud-based platforms to manage data efficiently, IoT for real-time data collection, blockchain for secure transactions, and digital twins to simulate and optimize urban processes. For example, authorities in Spain are building the country’s first digital twin of Campo de Cartagena, a natural coastal region in Murcia. This digital twin will visually compare changes to water, vegetation, and the environment over time, and run simulations to predict and prevent disasters such as flooding, pollution, and the effects of climate change. It will also model the impact of urban growth. 

In addition, Stuttgart, Germany, is developing a digital twin platform that will visualize and analyze data from IoT sensors across the city to promote sustainability and enhance the quality of life for its 600,000 citizens. This platform will monitor water quality, flood levels, and parking space occupancy, enabling the city to optimize operations and make informed decisions for the future.  

Bob Leek, CIO, Clark Country, Nevada. I believe that AI will invade every aspect of all technologies. I expect my software and hardware partners to incorporate improvements in their solutions embedded with AI. For a long time, the concept of “smart devices” has been prevalent; with AI, those devices become even smarter. Then, collecting all of that data and creating views informed by the data and analyzed by tools will result in more focused efforts in areas like water conservation, air quality improvements, early warning and detection of anomalies, and so on. 

Jean Barroca, Global Public Sector Digital Modernization Leader, Deloitte. Cities around the world are increasingly adopting advanced technologies to enhance urban living and become future ready. Among these technologies, AI, blockchain, and digital twins play pivotal roles. Blockchain is revolutionizing urban management by enhancing energy efficiency, smart mobility, and public administration. For smart mobility, blockchain, coupled with IoT, enables real-time tracking, optimizes routing, and supports secure, seamless payment across transportation modes, contributing to sustainable and efficient transport networks. The city of Dubai, for instance, is pioneering blockchain applications, aiming to move all government transactions onto a blockchain, anticipating significant financial and environmental benefits. 

Digital twins provide a bridge between reality and virtuality. Technically, the digital twin solves the problem of scattered or weak integration experienced in traditional smart cities. Digital twins will become increasingly powerful in enabling data-driven decisions and will have a high adoption rate among city governments, with a promise of making cities more resilient.  

Peter Pirnejad, City Manager, Los Altos Hills, CA. AI is used in sophisticated forms of cybersecurity, cloud storage, and other IT-related uses. More generally, AI and Gen AI are used in applications that directly affect government services. The detection of voice and translation of video and other complex unstructured data into structured data that you can react with is making unbelievable advancements in human intelligence augmentation and allowing us to engage and interact with the world around us as if we had an army of intelligence at our disposal. 

Andrea Sorri, Segment Development Manager, Smart Cities – EMEA, Axis Communications. AI used with camera streams can feed valuable data into digital twins’ solutions and produce “what – if” applications/simulations in the digital twins with relevant real-world data. 

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. Cities use AI integrated with IoT for real-time data optimization, blockchain for secure data transactions, and digital twins for urban planning and infrastructure simulation. This unified approach to data management enhances overall decision-making and operational efficiency. 

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. The huge amount of data needed will create a big demand for CPU, GPU, and “cold” storage systems, which will not be feasible to implement on premises (because of the high cost of implementation). Therefore, cloud solutions will be required. Blockchain technology will work as one source of the truth, working as a ledger, for example, for anti-fraud and anti-corruption purposes. IoT as a data source will have the strongest impact on the transport industry. Digital twins are the most important instrument for the development of the city’s master plan, so that construction companies will be able to avoid mistakes and save on cost.  

 

6. Which are some of the biggest concerns and challenges around the use of AI in cities? How can cities overcome these obstacles? 

Bob Leek, CIO, Clark Country, Nevada. The biggest concern that I see is how to define the amount of risk a county is willing to take in adopting and adapting to these new technologies. The battle to be a desired destination for businesses and residents, and in our case here in Clark County (Las Vegas) to attract conferences and conventions, will be won through the best use of the intelligence and wisdom that comes out of the use of AI. 

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. Concerns include privacy and data security, bias and fairness, and transparency and trust. Addressing skill gaps and data quality management is also crucial. Furthermore, effective consent management and AI’s role within current data frameworks are essential. Overcoming these challenges involves implementing robust data protection regulations, ethical guidelines, AI literacy programs, and public participation in AI decisions. 

Øyvind Tanum, Head of Smart City, Trondheim, Norway. Privacy, security, increasing complexity, and lack of knowledge are all big concerns. Also, the fact that technology is developing a lot faster than use cases and know-how. Some solutions to these challenges include knowledge programs, using pilots, close connections to research facilities, and fast feedback loops. The idea is to fail fast, fail safe, and fail cheap. 

Miguel Eiras Antunes, Global Smart Cities & Urban Transformation Leader, Deloitte. The integration of AI in cities raises concerns, including privacy and data security, bias and fairness, job displacement, and ethical considerations. Cities can overcome these challenges by implementing robust data protection regulations, developing fairness and bias mitigation techniques, investing in workforce reskilling, and ensuring transparent AI decision-making processes. Public engagement and education are crucial, as is fostering collaboration between government, industry, and academia to drive innovation and share best practices.  

Peter Pirnejad, City Manager, Los Altos Hills, CA. The biggest concerns around the use of AI are deep fakes and scams. We are seeing a growing number of scams and cybercrimes that have AI-embedded technology that are able to negotiate their way through a conversation or digital engagement in a way that opens access to identify theft. This has resulted in countless losses both reported and unreported. These heinous acts are being perpetrated on our most vulnerable populations, such as the elderly. 

Andrea Sorri, Segment Development Manager, Smart Cities – EMEA, Axis Communications. One concern is related to ethics and privacy when the technologies used are sound and video streams in city surveillance systems or traffic-monitoring systems. How can citizen trust be guaranteed while still retrieving valuable data? The challenge is more related to how city leaders communicate with citizens than the actual use of AI. 

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. Data protection is the most important issue, to prevent use of fake data or direct access to citizens’ data. Cities will require a strong policy on cybersecurity and creation of the role of a chief cybersecurity officer at the city level. Another challenge is the proliferation of different types of databases, which need to be connected in an optimal  way to enable valuable data analysis and correlation. 

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. Key concerns include data privacy, security, and the digital divide. Cities can overcome these obstacles by implementing robust cybersecurity measures, ensuring transparent data governance, and promoting digital literacy and inclusion programs to ensure equitable access to AI benefits. 

 

7. What actions should cities take now to become AI ready? What does a roadmap to AI empowerment look like for cities?  

Peter Pirnejad, City Manager, Los Altos Hills, CA. It starts with the training of your council, community, and staff. Then you need to develop use policies that dictate and ensure, to the public, how you intend to use the technology to improve and expand public service. Finally, explore, pilot, pivot, and iterate on the use of Gen AI and AI-enabled solutions and test the impacts and enhancements they have on the quality of service you offer to your constituents.  

Andrea Sorri, Segment Development Manager, Smart Cities – EMEA, Axis Communications. It is critical to get the right and enough resources to manage the dialogue with citizens. Also, cities must prioritize among all the possible use cases and work across departments within the city,  to achieve full cross-functional operations. 

Bayan Konirbayev, Advisor to the Mayor of Almaty city, Kazakhstan. I have several suggestions, including:  

• Create a unified data warehouse as a single source of truth 
• Create a data lake as a sandbox for hypothesizes testing 
• Appoint a Chief Digital Officer, Chief Data Officer, or Chief Security Officer with all necessary resources to become a resilient city  
• Create a data regulation policy with data governance rules that are obligatory for all stakeholders 
• Work with businesses through the public-private partnerships to ensure that solutions and policies are sustainable even when city governments change hands  
• Confirm a budget for the digital development 

Professor Pascual Berrone and Professor Sampsa Samila, IESE Business School, Spain. To become AI ready, cities must include AI as part of their overall long-term strategy. This means ensuring that AI initiatives are not just piloted but are also scaled effectively, avoiding past mistakes such as those where smart initiatives were started but never fully implemented. Investing in digital infrastructure, fostering public-private partnerships, and developing regulatory frameworks that promote ethical AI use are essential steps. Cities should also focus on establishing robust data governance policies, upskilling the workforce, and promoting digital literacy and inclusion programs. Creating a culture of innovation that embraces technology-driven solutions will be crucial for leveraging AI to improve urban living, enhance services, and ensure inclusive growth. 

Oleg Polovynko, Adviser to the Mayor of Kyiv City on Digitalization. Cities should develop a comprehensive AI strategy, invest in infrastructure, foster knowledge-sharing partnerships, and establish regulatory frameworks. A roadmap includes assessment and strategy development, infrastructure and skills enhancement, pilot projects, and scaling successful initiatives with continuous feedback and optimization. 

Bob Leek, CIO, Clark Country, Nevada. The roadmap to AI empowerment is not much different than the roadmap for any application of technology. It requires that the county has a clear sense of its strategic plan and a vision for the future, a number of tactics needed to achieve those outcomes, and applying AI technology in ways that ensure that those objectives can be achieved in ways that may have been more difficult or take longer in the absence of the availability of those technologies. 

The global wealth management industry faces converging megatrends that are redefining investor needs and reshaping the industry at a time of growing economic and geopolitical uncertainty. These trends include rapid technology innovation, mounting regulation, heightened competition, and broad demographic shifts. 

To investigate these developments and how they affect the industry, ThoughtLab has conducted a multi-client research program called Building a Future-Ready Investment Firm. As part of the study, we asked experts and sponsors a set of questions regarding how technology—including artificial intelligence—will change the wealth management industry and how work gets done. This article provides their answers to these questions.  

 

Which emerging digital technologies do you expect will have the biggest impact on the future of wealth management? What should investment firms do now to prepare?  

Carl Robertson, Global Chief Marketing Officer, FNZ: The race for competitive advantage in wealth management is increasingly being fueled by advances in artificial intelligence (AI) and machine learning (ML). We expect these technologies to play an increasingly important role as firms look for ways to create hyper-personalized wealth management services tailored to investors’ unique financial goals, risk tolerance, and holistic wealth picture.  

With extreme automation streamlining routine tasks and predictive analytics anticipating market trends, advisors can also use these advances to free up more time to focus on personal, human interactions with clients. And the question is no longer human advisor vs. digital advice: the answer is clearly that investors need and expect both. 

Investment firms need to lay down the digital groundwork to harness these technologies. Already we’re seeing a significant shift from using investment firms towards using modern, digital, end-to-end platforms that can leverage these emerging technologies to manage all aspects of a client’s needs, as well as deliver significant cost savings and generate new revenue in today’s dynamic financial environment. 

Mark Smedley, Financial Services Industry Executive, Genesys: AI, broadly defined, seems to be here to stay. Large language models (LLMs) for text, as currently envisioned, are likely to be refined and offered with more targeted data sets at lower cost. Voice biometrics are the subject of significant focus and investment. And independent advisors will likely have technologies available to them that only the largest institutions could previously afford. 

Dean Butler, Managing Director for Retail Direct and Advice, Standard Like UK: The key drivers will be automation, available large and holistic data sets (open banking in the UK), one view of the customer, and implementation of AI to aid the process. The democratization of wealth will also put the experience in the palm of the customers hand (via an app) with an engaging user interface (UI). The customer will be able to see in real time their financial position and automated steps to take action. Wealth management will go from being a proposition designed for the wealthy (and high new wealth) to being obtainable to most.   

April Rudin, CEO and Founder, The Rudin Group: The underlying challenge that most wealth management firms face regarding emerging digital technologies lies in change management and ultimately firm culture, which is beyond any individual technology itself. It is this preparation of existing talent and hiring of new talent that most investment firms should be considering and planning for. If there is no adoption or limited/uneven adoption of technology within a firm, can it be called successful? 

Firm culture plays a significant role in this process, and I expect the next generation of leaders to make great changes to the way firms operate and offer a more robust and fuller range of financial services beyond merely investment management. This means an increase in areas like financial literacy, education, tax planning, debt management, and the like. 

Dr Henning Stein, Fellow, Cambridge University Judge Business School: The biggest challenge may involve the ability to compare impact results to those of peers. I could imagine a platform where the quantifiable impacts of these strategies are made public in real time, in an ‘Impact Dashboard’ if you will. Envision QR codes on consumer products, linking back to real-world projects funded by sustainable investments—projects that both consumers and investors can actually see and feel. Imagine using blockchain to transparently track the life cycle of a sustainable project from investment to impact, thereby creating an indisputable record of real-world change.  

Imagine a world where the choices you make as an investor not only fuel innovation but also directly impact the price tags on your grocery store shelves. That’s the potential impact of technology for asset managers and wealth managers. 

Jean-Francois Lagasse, Global Wealth Management Leader, Deloitte Switzerland: An unforeseen volume of customer, competitive, and environmental shifts is emerging and evolving in the sector. The convergence of these shifts is creating new pressures and opportunities for wealth managers—for both individual product profit pools and the overarching business model. 

Kendra Thompson, National Wealth Management Leader at Deloitte Canada: The convergence of these technologies is what will fundamentally re-shape the wealth management value chain. Individually, this includes digital cloud-based applications, data and predictive analytics, API-based architecture, straight-through processes, and generative AI. Separately, these technologies are powerful. Together, they will change the face of wealth management as we know it. Firms should start by educating themselves in these technologies and how they deliver client, advisor, employee, or business outcomes. This provides the basis to articulate a target state and roadmap to build towards the future. 

 

How do you believe AI—especially generative AI—will change wealth management? Where do you see the most effective AI use cases? How will firms need to change their governance and policies to minimize risks? 

Din Mustaffa, Group Chief Strategy Officer, FNZ: We see one of the biggest uses of generative AI in augmenting the advisor-investor relationship. There are numerous use cases around personalized investments emerging, both to help with portfolio construction and decision making, and to provide analysis and insight into the custom portfolio itself. As the pressure to provide personalized wealth solutions increases, it is likely these use cases will gain greater acceptance. In particular, more generative AI chat bots will emerge to augment financial advice. 

On the administrative side, the sheer volume of client and counterparty communications to interpret (email, documents, forms, chats, voice calls, etc.) is becoming an industry wide headache—and a regulatory risk. AI clearly lends itself to extracting the relevant information, monitoring for compliance, and keeping a record for all of what was said, and is becoming integral to ensure adherence to compliance standards while minimizing operational risk. Advisors are now freed up from much of their administrative burden, to build more personalized end-investor experiences.    

Yoni Assia, Founder & CEO, eToro: We think that AI will only accelerate digital transformation. eToro’s quarterly survey of 10,000 retail investors across 13 markets reveals that consumers are open to using AI to pick or alter their investments. They are interested in using AI to pick stocks for them because they don’t have the time or don’t trust their knowledge.  

Just as Uber took advantage of inefficiencies in travel and AirBnB in hotel stays, AI will squeeze out inefficiencies in investing, taking care of the elements that humans don’t (or are not perceived to) add value, such as in portfolio construction. This isn’t confined to younger investors. Over-55s are ready to integrate AI and machine learning into their investment approach. Around one in six in our survey say they plan to increase investments in sectors that stand to benefit from AI. Almost half of this age group would use AI or machine learning to manage their portfolio rather than a human fund manager.  

At eToro work is already underway to see how generative AI can be deployed to our employees and customers. With over 34 million registered users and 3 million account holders globally, we have a lot of data and AI loves data! It’s been a natural evolution for us to experiment and enhance our intellectual property leveraging natural language processing and generative AI, for example for our Copy investor capabilities. We are also looking at how generative AI can help users slice and dice the information in our social feed more deeply and creatively. We’ve been using AI to enhance our customer service experience using it as a tool to empower rather than replace our customer service agents.  

There is more we are working on, but you won’t see it all immediately as it is vital for us to have the necessary guard rails in place. Like with any new technology, we need to ensure that AI is a force for good and that we have the necessary checks and balances. 

Mark Smedley, Financial Services Industry Executive, Genesys: AI is a very broad category, but for wealth managers and investors, clearly the capability to enhance or replace fundamental research already exists. The investment advisory side might be another matter entirely. In any case, the client experience is likely to be significantly enhanced with the combination of AI for both text and voice.  Authentication, identity, and recommendations will certainly be enhanced with leading AI. 

April Rudin, CEO and Founder, The Rudin Group: We have not yet discovered the ways that AI will change wealth management. One thing is using it to increase the knowledge level/experience of new advisors to jumpstart them with the knowledge that more experienced advisors might have and knowledge that formerly could only be acquired over time. I have not seen anyone doing anything as innovative as that. Because wealth management and financial services are highly regulated industries, the Securities and Exchange Commission (SEC) and other governing bodies will need to provide guidance, especially around advice giving. 

Brie Williams, Head of Practice Management, State Street Global Advisors: Data is vital as its utilization rapidly evolves. The wealth management industry is undergoing a transformative shift as it redirects its focus toward embracing more comprehensive and advanced descriptive and predictive analytics. This transformation aims to craft more complete client profiles, equipping financial advisors with the tools to make better-informed decisions, manage risks, and tailor services and solutions to each individual client’s unique needs and goals.  

Amid the buzz surrounding AI and other emerging technologies, the industry faces a critical need to distinguish the genuinely beneficial from the overly promoted, navigating a labyrinth of often misleading information. This underscores the importance of oversight and governance to safeguard the interests of wealth management clients and maintain trust.  

In this shifting landscape, the stakes are higher than ever, emphasizing that technology, while promising, must be effectively and ethically employed. In the era of AI in financial advice, the significance of human relationships remains paramount. While technology can enhance efficiency and recalibrate strategies, it falls short in providing emotional support and holistic comprehension of clients’ unique life events and financial well-being. The trust and value derived from authentic human interactions with financial advisors are irreplaceable, making them indispensable in a landscape increasingly influenced by AI. 

Dean Butler, Managing Director for Retail Direct and Advice, Standard Like UK: It’s essential that the correct use cases are selected for the use of AI in the first instance. Immediately AI can be used in conjunction with an adviser and their customer. The AI solution can listen to the conversation and proactively check and complete the data sets (fact find) as required. It can also act as an oversight function—checking customer venerability and ensuring that the adviser asks the correct questions to gain the required information, ultimately acting as an assistant.   

As AI models become more complex, there will be a time in the near future when the models can fully create holistic advice cases. However, this will require that the correct checks and validations are in place. And customers today still need human/advisor validation to make key financial decisions.   

Tim Worner, National Wealth Management Leader, Deloitte Australia: AI, particularly generative AI, will enable wealth managers to enhance operational efficiency, drive top-line growth, and mitigate risk. The most effective AI use cases in wealth management include improving advisor productivity through tasks automation and personalized client engagement, streamlining client servicing functions, optimizing technology and operational efficiency, and enhancing regulatory compliance monitoring.  

To minimize risks associated with AI adoption, firms will need to establish robust governance frameworks, encompassing ethical considerations and regulatory compliance. They should develop policies that ensure transparency, accountability, and responsible use of the tech, while also prioritizing data security and privacy. Regular training and education programs should be implemented to ensure employees understand the capabilities and limitations of AI systems, fostering a culture of smart experimentation and continuous improvement. 

Overall, AI, especially generative AI, holds the potential to revolutionize wealth management by driving cost savings, revenue growth, and improved client experiences. However, careful attention must be given to governance and policy frameworks to address potential risks and ensure ethical and responsible AI deployment. 

 

How will wealth management teams and advisors get work done in the future? What will technology do and how will the role of people, particularly investment advisors, change?   

Tim Neville, CEO, Asia Pacific, FNZ: The landscape of advisory firms is constantly transforming. Technology and integrated services allow advisory firms to offer market-leading personalized wealth solutions that extend to more clients at an industrial scale.  

This transformation is facilitated by the extreme automation of mundane tasks, freeing advisors to concentrate on holistic client management—the discussions and moments that matter. Many technologies, including artificial intelligence (and its many forms), will play a pivotal role in enabling advisors to scale their services without sacrificing the personal touch and behavioral guidance crucial to financial advising. The shift towards complete wealth planning at an individual and family level will continue to grow, with a greater reliance on outsourcing portfolio construction and tailoring investment strategies to individual client and family needs. 

To truly bring this to life, advisers must be able to access a seamless experience from the customer to the wholesale marketplace. This requires end-to-end integration of traditional adviser technology solutions through to the marketplace—giving the consumer complete access to well-priced wealth solutions that meet their needs. 

Mark Smedley, Financial Services Industry Executive, Genesys: Advisors should be preparing to reach clients through digital means in addition to voice calls. The acceleration of cloud adoption and digital transformation will require providers and advisors to use these technologies, including generative AI, in efficient, useful, and compliant ways. That requires a new knowledge-based approach. While the daily activities of an advisor may evolve, it’s unlikely they’ll be replaced. Self-service for certain transaction types, wealth-bots and certain research may be viewed as disruptive, but they also significantly enhance the role of the advisor by enabling them to focus on high value interactions and client experiences. 

April Rudin, CEO and Founder, The Rudin Group: Wealth management teams in Europe are a bit more nuanced, with relationship managers separate from investment managers and also business development managers. There can and will be great advancement in each of the newer areas of customer service/client experience that will enhance the time and amount of personalization that people can provide vs. the mundane repetitive tasks that technology can do well. More and more, better data and analytics will improve all areas of the delivery of advice for both advisors and end- investors alike. 

Dean Butler, Managing Director for Retail Direct and Advice, Standard Life UK: A new proposition is emerging in the market: the bionic adviser. This concept combines the “digital-first, always-on” approach with the support of a human adviser. By seamlessly integrating technology with financial advisors, it aims to reduce the cost of delivery and service, creating a straight-through processing system that offers continuous advice and guidance. Straight-through processing is an automated process done purely through electronic transfers with no manual intervention involved. 

The advisor will focus on understanding and engaging with customer needs, while the technology will craft personalized and tailored advice cases. This approach highlights the best actions for both the adviser and the customer to take. The advice, connected to extensive data sets, will always be available. Propositions will evolve beyond one-off consultations or annual check-ins to provide proactive, continuous advice and guidance. This system will connect customers to human advisers at the most opportune times. 

Furthermore, the traditional model of face-to-face meetings with advisors, often costing over 3%, will evolve. It is now expected that advisory services can be conducted remotely via chat or video at a lower cost, thus removing barriers to entry. It’s noteworthy that currently, 90% of the UK public does not consult with a financial adviser. 

Brie Williams, Head of Practice Management, State Street Global Advisors: Navigating the challenge of shaping the right agenda grows increasingly intricate. Yet amid this complexity, optimism prevails for a profound transformation in how work gets done and the very essence of financial advice. Advanced technological solutions propel this shift, automating data-driven decision making and facilitating hyper-personalization, fostering continuous engagement with investors. 

This technological metamorphosis serves as a catalyst for financial advisors seeking efficiency gains. Machine intelligence streamlines operations, reduces administrative workload, and ensures agility amidst greater fee transparency and lower costs. Embracing technology is integral for achieving the highest-impact business transformation, measured by new growth, adaptation of the traditional core business, and healthy financial performance.  

Advisors, recognizing the opportunity to differentiate with holistic financial planning, evolve from traditional investment roles. They set new standards in delivering advice and investment products, providing guidance and strategies that thoughtfully consider the interplay between various aspects of a client’s financial life, including any conflicting objectives. This advice delivery model seamlessly integrates with technological advances, empowering clients to monitor, adjust, and progress toward their aspirations. It’s the best of both worlds: a forward-thinking approach that combines technological innovation with the human touch of personalized financial advice. 

Forward-looking study shows how investment firms are preparing for the future as investor demographics and expectations shift worldwide 

February, 2024 (New York, NY) – New analysis from a research coalition comprised of wealth management experts from ThoughtLab, Deloitte, FNZ, AWS, and Genesys shows that by 2028, the investment industry will look very different. Senior executives around the world believe that technological, regulatory, competitive, demographic, and economic shifts will redefine investor expectations and reshape the industry:  

• 69% of executives believe AI will significantly change the way their firms work. And 47% say blockchain and related technologies will reduce the need for intermediaries, such as custodians and clearinghouses.  
• 55% of executives say born-digital firms will transform the wealth industry, and 51% of wealth management firms leading in digital transformation expect a dramatic industry shakeout.  
• 52% of executives say that most products will become commoditized, forcing providers to offer value-added services to defend fees. And 39% believe lines between wealth management, banking, and insurance will be blurred as investors demand more holistic products and services.  

The study highlights the need to accelerate digital and process transformation as Generation X moves to center stage, Generations Y and Z become more influential, and wealth grows in emerging markets:   

• 68% of investors—and 74% of Gen Y/Z and 71% of Gen X—want their providers to offer digital experiences on par with leading born-digital companies. 
• 60% of investors want their providers to supply them with better digital tools so that they can manage their investments directly. 
• 51% of investors would invest through big brand retailers or tech companies if given the opportunity. 

These results are from a ground-breaking study, Building a Future-Ready Investment Firm. The study included two worldwide surveys fielded in October-November 2023: a benchmarking survey of senior executives from a cross-section of 250 wealth management firms and a survey of 2,000 investors across countries, wealth levels, ages, lifestyles, occupations, and other characteristics. To gain qualitative insights, the study included an advisory panel of leading wealth industry experts, as well as in-depth interviews with senior industry practitioners from 11 wealth management firms.    

“To thrive in the next era of investment, industry executives need a clear view of the future expectations and behaviors of worldwide investors and what providers plan to do to keep them happy,” says Louis Celi, CEO of ThoughtLab and director of the study. “Our research shows how firms need to rethink their products, services, processes, business models, and digital strategies to become future ready.”    

Five key takeaways 

The research uncovered five important steps that wealth management firms are taking to become future ready: 

1. Make client diversity a business opportunity. Firms are going upmarket, down market and across global markets—and deeper into client niches—to find growth. They are using data to    understand their clients as individuals, not investor segments, and personalize solutions. They are also diversifying their advisor base to serve a more heterogenous clientele.  

1. Digitally transform client advice and experience. Technological advances are transforming advisor roles and client experiences. Over the next three years, 60% of advisors expect to use AI tools and 67% will rely on hybrid, tech-driven approaches. Firms are behind in meeting investor preferences for engagement through mobile devices and video conferences.  

1. Rethink offerings for the next investing era. Over the next three years, investors will want higher-value products and services—from alternatives (62%), annuities (50%), ESG investments (39%), and custom index funds (25%) to discretionary investment (60%), tax planning (44%), and private banking (41%). To deliver, firms will use digital solutions to drive down the cost to serve. 

1. Adapt business models and market positioning. A new playing field will emerge as digital entrants trigger market shifts and firms reinvent themselves and consolidate. Investor churn will add to the disruption: 56% of investors say they are considering changing providers over the next three years, with fees being the top reason. To respond, firms are lowering or capping fees, while others are building value by adding holistic and specialized planning services. 

1. Drive performance through AI and digital innovation. Firms have made huge progress in digital transformation, with 8 out of 10 advanced or midway in implementing their plans. Firms are seeing high returns on their digital investments: 44% report lower costs, 41% higher shareholder value, and 40% increased revenue. Over the last three years, AI was the top tech investment, which will continue over the next three years.  

 

For more information, contact:
Lou Celi, Chief Executive Officer
ThoughtLab
Louceli@thoughtlabgroup.com 

Anna Szterenfeld, Editorial Director
ThoughtLab
annaszterenfeld@thoughtlabgroup.com 

 

About the coalition  

ThoughtLab is an innovative thought leadership firm that creates fresh ideas through rigorous research and economic analysis. We specialize in assessing the economic, financial, and social impact of technology on cities, companies, industries, and markets. Our services include fielding business, consumer, investor, and government surveys; organizing executive interviews, meetings, and advisory groups; conducting economic modeling, benchmarking, and performance analysis; and developing white papers, eBooks, infographics, and customer-facing analytical tools. 

Deloitte’s global wealth management group acts as stewards of change within the industry, supporting firms and the ecosystem players that surround them as they tackle heart-of-the-business issues, refine their strategy, and transform their business. The Deloitte team includes top wealth management talent from around the world who are well-informed subject matter experts. We provide services across audit, tax, consulting, and financial and risk advisory, leveraging leading-edge best practices gained from engagements across the globe. We believe the future of wealth management transcends traditional wealth thresholds and channels—with advice as the distinct offering—and we can help you transform your business to achieve this. Learn more at our website. 

FNZ is a leader in global, end-to-end wealth management platforms, partnering with over 650 of the world’s leading financial institutions and over 12,000 wealth management firms. With 5,000+ employees in 30+ global locations, FNZ’s mission is to open up wealth, helping everyone, everywhere to invest in their future. FNZ removes friction from wealth management, freeing its partners to create hyper-personalized and differentiated experiences for their advisors and end-investors. To date, FNZ administers more than $1.5 trillion in client assets and enables over 20 million people, from all wealth segments, to invest in a simple and transparent way. For more information, please visit www.FNZ.com and follow us on LinkedIn (@FNZ Group). 

Genesys orchestrates billions of remarkable customer experiences every year for organizations in more than one hundred countries. Through the power of our cloud, digital, and AI technologies, organisations can realize Experience as a Service®, our vision for empathetic customer experiences at scale. With Genesys, organisations have the power to deliver proactive, predictive, and hyper personalised experiences to deepen their customer connection across every marketing, sales, and service moment on any channel, while also improving employee productivity and engagement. By transforming back-office technology to a modern revenue velocity engine Genesys enables true intimacy at scale to foster customer trust and loyalty. Visit www.genesys.com.  

  

Forward-looking study will analyze how worldwide shifts in investor demographics and needs are expected to transform the wealth industry 

October, 2023 (New York, NY) –ThoughtLab, a leading global research firm, has joined forces with a coalition of wealth management leaders to analyze how technology innovations, mounting regulations, heightened competition, sustainability pressures, and demographic shifts will redefine investor needs and experiences and reshape the industry at a time of growing economic uncertainty.  

To prepare for this next era of wealth management, investment management firms need a clear view into the changing expectations of today’s diverse range of investors over the next three years—and how competitors are rethinking their investment products and services, go-to-market strategies, value propositions, and business models to thrive in a rapidly transforming industry. 

A probing look into the future of wealth management  

To investigate these trends and what they will mean for the industry, ThoughtLab is working with wealth industry leaders to conduct a rigorous research initiative called Wealth Management Megatrends: How worldwide shifts in investor needs, behaviors, and demographics will remake the wealth industry. ThoughtLab is conducting the research in partnership with Deloitte and FNZ, and with the sponsorship of Amazon Web Services, Genesys, and London Stock Exchange Group (LSEG). 

Research partners:  

• Deloitte: strategic and transformational change within the wealth industry 
• FNZ: the global, end-to-end wealth management platform that integrates modern technology, business, and investment operations  

Research sponsors:  

• Amazon Web Services (AWS): specialized cloud solutions for the financial services industry 
• Genesys: provider of AI-powered experience orchestration helping financial firms engage with customers across voice and digital channels through its all-in-one CCaaS platform 
• London Stock Exchange Group (LSEG): wealth management data and actionable insights  

This comprehensive study will consist of two worldwide surveys conducted before the end of 2023: one survey will target 2,000 worldwide investors across demographic and psychographic profiles, and another will cover 250 wealth and asset management providers. To get a broad perspective, the program will include insights from an advisory board of leading wealth management executives; in-depth interviews with industry experts and practitioners; and economic modeling and analysis by ThoughtLab’s team of economists. 

The study will answer critical questions on what lies ahead for the wealth management industry, including:  

• The investor of the future: How will economic, demographic and lifestyle shifts change investors and their expectations? How will wealth management firms reimagine their strategies for younger investors, while meeting the needs of older generations?  
• Hyper-personalization: As investors become more diverse and wealth goal oriented, what levels of personalized support and advice will they expect? How will wealth management firms provide personalization at scale and at a price point acceptable to investors? 
• Frictionless investing: In the years ahead, will investors expect investment firms to provide the same frictionless digital experiences they get from digital retailers and Big Tech firms? How will client experiences improve with the development of AI, blockchain, and Metaverse? 

• Next era of democratization: Retail investors increasingly seek access to products and services now reserved for the rich, such as hedge funds, IPOs, and private equity. How will investment providers democratize and demystify offerings in the face of evolving regulations?  
• Sustainable investing becomes the norm: If trends continue, by 2030, sustainable investment will be mainstream. How will this change the way investors assess their portfolios? What sustainability data, and what kinds of returns, will they expect? And what will be the response?  
• Next-level innovation: AI, blockchain, Metaverse, and other innovative technologies—enabled by the cloud—will trigger a flurry of innovation that will redefine all aspects of wealth management, from new products to new business processes. What opportunities and risks will these technologies create? 
• Shifting roles of people and machines: In a digital world, machines will take on many of the tasks previously performed by people. Which investment activities will still require a personal touch? How will advisors use new digital tools to provide enhanced services to clients?   
• A redrawn competitive landscape: These cascading changes will likely trigger a major market shakeout and consolidation in the years ahead. Which types of firms will be the winners and losers as the industry shifts to digitally enabled platform-based models?  

“Investors hold the key to the industry’s future. By making them the focus of our research—and drawing on the views of industry experts, practitioners, and ThoughtLab economists—we will provide actionable insights into how wealth management firms will need to rethink their strategies for the next era of digital wealth management,” said Lou Celi, CEO of ThoughtLab.   

As part of this open research initiative, the study group will provide regular updates on the program, along with the latest analysis, useful data resources, and valuable insights, to the global wealth management community. The research program will continue over the next several months, with the full study findings, actionable insights, and related decision-support tools to be released in early 2024.  

 

For more information, contact:
Lou Celi, Chief Executive Officer
ThoughtLab
Louceli@thoughtlabgroup.com 

Anna Szterenfeld, Editorial Director
ThoughtLab
annaszterenfeld@thoughtlabgroup.com 

 

About the coalition  

ThoughtLab is an innovative thought leadership firm that creates fresh ideas through rigorous research and economic analysis. We specialize in assessing the economic, financial, and social impact of latest technology on cities, companies, industries, and world markets. Our services include fielding business, consumer, investor, and government surveys; organizing executive interviews, meetings, and advisory groups; conducting economic modeling, AI sentiment monitoring, benchmarking, and performance analysis; and developing white papers, eBooks, infographics, and customer-facing analytical tools. 

Deloitte’s global wealth management group acts as stewards of change within the industry, supporting firms and the ecosystem players that surround them as they tackle heart-of-the-business issues, refine their strategy, and transform their business. The Deloitte team includes top wealth management talent from around the world who are well-informed subject matter experts. We provide services across audit, tax, consulting, and financial and risk advisory, leveraging leading-edge best practices gained from engagements across the globe. We believe the future of wealth management transcends traditional wealth thresholds and channels—with advice as the distinct offering—and we can help you transform your business to achieve this. Learn more at our website. 

FNZ is a leader in global, end-to-end wealth management platforms, partnering with over 650 of the world’s leading financial institutions and over 12,000 wealth management firms. With 5,000+ employees in 30+ global locations, FNZ’s mission is to open up wealth, helping everyone, everywhere to invest in their future. FNZ removes friction from wealth management, freeing its partners to create hyper-personalized and differentiated experiences for their advisors and end-investors. To date, FNZ administers more than $1.5 trillion in client assets and enables over 20 million people, from all wealth segments, to invest in a simple and transparent way. For more information, please visit www.FNZ.com and follow us on LinkedIn (@FNZ Group). 

Genesys orchestrates billions of remarkable customer experiences every year for organizations in more than one hundred countries. Through the power of our cloud, digital, and AI technologies, organisations can realize Experience as a Service®, our vision for empathetic customer experiences at scale. With Genesys, organisations have the power to deliver proactive, predictive, and hyper personalised experiences to deepen their customer connection across every marketing, sales, and service moment on any channel, while also improving employee productivity and engagement. By transforming back-office technology to a modern revenue velocity engine Genesys enables true intimacy at scale to foster customer trust and loyalty. Visit www.genesys.com.  

LSEG (London Stock Exchange Group) is a leading global financial markets infrastructure and data provider, playing a vital social and economic role in the world’s financial system. With our open approach, trusted expertise, and global scale, we enable the sustainable growth and stability of our customers and their communities. We are dedicated partners with extensive experience, deep knowledge, and a worldwide presence in data and analytics; indices; capital formation; and trade execution, clearing, and risk management across multiple asset classes. LSEG is headquartered in the United Kingdom, with significant operations in 70 countries across EMEA, North America, Latin America, and Asia Pacific. We employ 23,000 people globally, more than half located in Asia Pacific. LSEG’s ticker symbol is LSEG. 

The wealth management industry is at an inflection point, facing a confluence of disruptive forces reshaping its landscape. As a significant wealth transfer from the older generation meets the digital-first expectations of the young, the demand for technological sophistication and personalized services is intensifying. As new players emerge and the market landscape shifts, incumbents must adapt to safeguard their position. 

To investigate these developments, ThoughtLab is conducting a multi-client research program, Wealth Management Megatrends: Building a Future-Ready Investment Firm. As part of the study, we asked industry experts and study sponsors their views on trends in the industry, investor behaviors and preferences, and the implications for their businesses. This is the first of a set of articles providing their perspective on the wealth management industry’s future. 

 

What are the biggest disruptors the wealth management industry faces today? What impact do you expect them to have on the industry in the future? 

Chris McDonald, Industry Specialist, Capital Markets, AWS: The most significant disruptors the wealth management industry faces today stem from developments in artificial intelligence and machine learning. More specifically, the focus is currently on the potential and possible impact of generative AI, a type of AI that can create new content and ideas, including conversations, stories, images, videos, and music. Generative AI is poised to drive change and innovation, particularly in personalization, customer interaction, education, and customer insights for advisors. While the full potential of generative AI remains unexplored, one of the greatest impacts expected in the near term is increased advisor efficiency. For example, generative AI is showing promise for its ability to enable advisors to use text from various touchpoints to automatically create customized investment insights, recommendations, and educational content. This use would free up time advisors spend on administrative tasks, allowing them to focus on high-value work and improved customer service. Once firms start deploying generative AI use cases, developing data strategies, and addressing legal, regulatory, and compliance concerns, we can expect a substantial shift in the way the wealth management industry conducts business. 

Yoni Assia, Founder and CEO, eToro: Technological transformation (first digital and now AI) has lowered the barriers to entry and significantly increased retail participation. You no longer need six figures to invest. This means that there is a vast and growing total addressable market for wealth managers and other direct- to-consumer investment providers/brokers. While the opportunity is growing, those wishing to benefit will need to understand and be able to meet the increasingly demanding needs of these consumers. Consumers expect an intuitive, digital-first user experience coupled with a high degree of personalization. We expect technology-driven disruption to only accelerate: within the past decade we’ve begun to see the impact of digital transformation, blockchain technology and AI, to name just three. 

Mark Smedley, Financial Services Industry Executive, Genesys: Providers should be planning to bring the best of online digital and voice-based digital services to the mass affluent market, paying special attention to Gen Z expectations.  Gen Z-earned wealth and intergenerational transfers will likely behave differently in interesting ways. The client experience will come with very high digital and mobile expectations.  Given digital natives’ unprecedented access to data and technology, the challenge to advisors will be to provide clients with knowledge and context they can’t find on their own. Gen Zers are more likely to take into account specific environmental and social values when looking at investment options and portfolio returns. But they will expect both measurable social investing outcomes and  financial returns. The expectation bar is likely to continue to rise, requiring savvy advisors and technology-enabled providers to take full advantage of leading AI and data. 

April Rudin, CEO and Founder, The Rudin Group: The biggest disruptor is the shortage of human advisors necessary to fulfill the needs of investors. With inheritors, wealth creators, and under-served investors on the rise, juxtaposed with the number of financial advisors who are aging out and not being replaced by younger advisors, it is a very pressing problem. 

Dean Butler, Managing Director for Retail Direct and Advice, Standard Like UK: Customers now expect digital-first propositions with exceptional UI/UX that accommodate evolving and complex needs. Those who fail to meet these expectations risk falling behind. There is a noticeable trend of new entrants in the market, characterized by fintechs partnering with traditional firms. This collaboration is set to disrupt traditional business models and significantly affect monetary flows. Traditional incumbents that do not adapt swiftly to meet customer needs will find themselves negatively impacting their financial flows. Furthermore, there is a rising trend towards democratizing financial advice. Businesses that fail to leverage technology for enhancing engagement and delivery will find their models becoming outdated.  

Jaime Lázaro, Head Asset Management and Global Wealth, BBVA: There are both regulatory and technological disruptors. On the regulatory side, recent proposals will mean that advisory and discretionary managed accounts will grow faster in the coming years. Regarding technology, AI and blockchain will become more relevant, generating both operational efficiencies and the tokenization of assets. 

Brie Williams, Head of Practice Management, State Street Global Advisors: In today’s rapidly changing landscape, the wealth industry is undergoing a wave of consolidation that is reshaping the entire sector. To ensure the long-term viability of their businesses, wealth management providers must adapt to the evolving paradigm. This seismic shift coincides with the largest generational wealth transfer the industry has ever seen, and next generation clients who demand  cutting-edge technologies, and seamless digital client experiences.  These factors converge to create a dynamic environment requiring a thoughtful response. 

The emergence of new wealth, global market uncertainties, and evolving regulations, adds additional complexity, compelling the industry to confront fundamental challenges in maintaining and expanding client relationships. This is resulting in an unprecedented focus on client experience, with an emphasis on the digital journey.  

The future of the industry is undeniably intertwined with its ability to adapt, innovate, and transform in the face of disruption, positioning those who embrace this evolution for growth and success. To build resilience, providers must transform their operational, technological, and service models. The status quo is no longer viable; it’s time to reimagine the way business is conducted. 

Michael Hunwick, Management Consulting Director, Deloitte UK: As the financial services industry increasingly recognizes the significance of the advisory relationship in fostering loyalty and intimacy, all players are shifting their focus towards delivering comprehensive advisory experiences at the point of sale and beyond. This shift is driving the traditional wealth management industry to elevate its offerings and provide greater flexibility. 

Jean-Francois Lagasse, Global Wealth Management Leader, Deloitte: The single most important disruptor in the industry today is the client. Investors and families have higher financial awareness, literacy, and access to information than at any other point in our history. Their attitudes, expectations, and behaviours—often conditioned in industries outside of financial services—are compelling wealth managers to innovate across their business models. We’re observing comprehensive innovation across products, services, experiences, non-traditional partnerships, and revenue models.  

Tony Wood, Asia Pacific Banking Leader and Partner, Deloitte Hong Kong: The debate about what is possible has ended, and now the race is on to see who can modernize in the most compelling and efficient way. The ultimate winner will not only prioritize enhancing the customer experience but also focus on reducing the cost of service and scaling advice for all types of investors. 

Peyman Pardis, Management Consultant, Wealth Management, Deloitte: There are multiple disruptions of note. Investment products are turning into commodities as firm-led portfolios and ETFs proliferate, making value-add services and broader wealth offerings crucial for fee preservation and differentiation. Heightened client expectations for personalized, accessible, digital, and straightforward experiences will continue to drive the success of scalable digital-first, hybrid advice solutions for mass-market and mass affluent accounts. Developing and maintaining financial relationships will require deliberate efforts as data and fund portability increase, necessitating cross-business advice and relationship models to protect in-house customers.  

The proliferation of firm-led strategies will elevate the significance of alternative investment products as the key differentiator among wealth managers, with partnerships playing a vital role as enablers. And clients’ desire to align their investments with their beliefs and values will increase across segments, driven by the empowerment of information, resulting in separately managed accounts and thematic funds becoming differentiators through direct indexing and algorithmic trading solutions. 

 

Will emerging market trends and new competitive players lead to market shakeout over the decade? Who will be the winners and losers? What will incumbents need to do differently to preserve their place? 

Yoni Assia, Founder and CEO, eToro: In 2019, the total global wealth invested in stocks was $78 trillion, with digital platforms accounting for approximately 20% of wealth invested in equities. This market remains highly fragmented and served by a number of local and pan-regional competitors, mainly characterized by online platforms and large, traditional financial institutions, such as retail banks, private banks, and wealth management firms and high growth fintechs. Online multi-asset platforms such as eToro have been able to capitalize on the secular trends towards self-directed investing, by offering an engaging user experience, accessible educational materials, and a wide range of assets at a competitive cost. They have been growing their share of an increasing market. We expect this growth to continue, and we anticipate ongoing consolidation amongst market participants. 

Mark Smedley, Financial Services Industry Executive, Genesys: On the topic of disruptors overtaking  incumbents in financial services, the Mark Twain quote comes to mind: “The reports of my death are greatly exaggerated.” Picking winners and losers in this context seems the domain of soothsayers and tech writers. A pragmatic way of thinking about the future is to observe trendlines from recent history. While technology and business model innovation has greatly impacted incumbents, they have largely not been replaced. Cloud, crypto, Web3, and AI are far more likely to enhance operations and customer experiences offered by incumbents rather than replacing them. That said, new entrants properly capitalized and with client-facing value propositions remain a threat. One thing seems certain: all providers need to maintain a keen awareness of emerging technologies. This, coupled with a mature understanding of how and when to deploy them, is and will remain a key competitive differentiator. 

April Rudin, CEO and Founder, The Rudin Group: Here comes something controversial: I think that the growth of the RIA channel will be a “fad” as more and more consolidate to form larger organizations. Today’s next gen will turn out to be much more conservative than what others have predicted. Considering all of the world events, Covid, and financial-market volatility, I predict that bank and wire house wealth management will be growing channels and that other more independent channels risk being left behind. Self-serve models can easily be incorporated into large enterprise models so that they can serve a wide variety of clients, in any manner that they want to be served! No more one-size-fits-all! Incumbents need to continue to partner with point solutions to improve their offerings and perhaps even offer “down brands” from their upper brands of service models. 

Brie Williams, Head of Practice Management, State Street Global Advisors: As financial advisors retire, investors will explore new transaction methods, fueling the rise of digital-first and hybrid approaches. Wealth managers who neglect adaptation risk falling behind.  

These industry shifts extend beyond servicing traditional segments, embracing a wide spectrum of investor profiles, from HENRYs (High Earners, Not Rich Yet) to those within the realms of high-net-worth categories, including the hybrid affluent investor—individuals balancing self-directed accounts and traditional advisory services. These emerging investor segments value the guidance of human advisors while also prioritizing affordability and accessibility in their direct investing experiences.   

In response to these dynamic changes, wealth managers need to consider onboarding hybrid solutions and craft a seamless bridge between these two worlds. However, achieving this intricate balance is a multifaceted challenge, with attention to management of channel conflicts, including mitigating potential revenue impacts. 

Dean Butler, Managing Director for Retail Direct and Advice, Standard Life UK: The market will evolve, and disruption will happen. It happens in all industries over time. Incumbents will need to rapidly embrace new technology capabilities and the opportunities to engage with customers in a digital/hybrid environment. They will need to rapidly evolve both their customer and advisor proposition set—connected to an e2e aligned technology platform(s). Many incumbents are married to legacy platforms, and it will take bold leadership to first define and share the vision and then take action. The losers will be those that do not take action and keep with what they know today. The winners will be those that truly spot the opportunity and implement it; be it with their own teams focused on the same goal and/or by connecting with fintech’s to realize the vision. Ways of working will be key to this. Those who best harness a digital mindset married to Agile delivery will ensure that they do not launch multi-million programs of work that are set up to fail from day one.   

Dr Henning Stein, Fellow, Cambridge University Judge Business School: A clear trend has emerged: wealth managers are becoming increasingly selective on behalf of their clients, emphasizing stable, long-term performance in investments. This shift reflects a growing preference for stable, alpha-oriented strategies over short-term gains. Wealth managers are scrutinizing the plethora of products offered by asset managers more closely than ever. While some asset managers may operate numerous funds, frequently launching new ones focused on current hot topics to maximize short-term performance and attract client capital, this approach is being met with caution. Wealth managers recognize that such strategies, though potentially lucrative in the short term, can carry significant risks. If the strategy fails, it is the investors who face the consequences.  

This cautious approach is particularly pertinent when considering fund providers with a broad range of products, including both high-performing and underperforming funds. This pattern often suggests a reliance on high-risk or marketing-driven strategies, where the investor’s well-being may not be the primary focus. Wealth managers, acting in the best interest of their clients, are increasingly viewing such providers with skepticism, opting instead for asset managers who consistently demonstrate a commitment to long-term stability and performance.  

As wealth managers continue to advocate for their clients’ best interests, the emphasis is on aligning with asset managers who prioritize not just immediate returns, but sustainable growth and risk management, ensuring the long-term financial well-being of the investors.  

Jean-Francois Lagasse, Global Wealth Management Leader, Deloitte: We have confidence in incumbents, as they have consistently demonstrated their ability to adapt. New entrants have primarily served as catalysts for change and have showcased what is possible. This is a capital-intensive industry, and those with an established investor base and large balance sheet are likely to come out on top. However, the true winners in our industry’s modernization will be the end investors and their families, and that should be the primary metric by which we measure the future success. 

Matthew McWhirter, Strategy Leader, Wealth Management and Retail Financial Services, Deloitte: There is a potential “hollowing-out of the middle”—where new entrants carve-out pockets of the market with differentiation, innovation, and agility; and where super-scale incumbents further entrench their market leadership positions.