Press release: How wealth management firms will reinvent themselves to thrive in the next era of investing

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.