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Survey finds Digitalization & Market Expansion Elevate Wealth Managers’ Expenses

New Delhi: Acuity Knowledge Partners (Acuity), a firm specialising in tailored research, analytics, staffing, and technology solutions for the financial services industry, has unveiled insights from its latest global wealth managers’ survey.

Internationally, private wealth managers are encountering various challenges. According to Acuity’s recent annual report, while traditional mandates are anticipated to remain relatively stable, 65% of respondents anticipate a rise in new mandates. However, this growth comes with added expenses, as more than three-quarters of wealth managers identify expansion into new markets and digitization as primary cost drivers.

Furthermore, the demographic landscape of the global customer base served by wealth managers is swiftly evolving. Over the next two decades, approximately $84 trillion of wealth assets are predicted to transition as younger clients inherit wealth. About one-third of wealth managers surveyed by Acuity express a focus on establishing personal connections with the younger generation. Additionally, wealth managers are adjusting their services to accommodate a more equitable gender distribution among clients. It’s projected that American women alone will control around $30 trillion of wealth by 2030, with similar trends expected in Asia and Europe. Consequently, aligning products and services with the preferences of this expanding cohort of female investors is crucial. As part of this effort, wealth managers are aiming to diversify their workforce, with more than a fifth planning to recruit additional female advisors.

Meanwhile, amidst expectations of modest global wealth growth in 2024, wealth managers who can provide comprehensive solutions—such as estate planning, tax planning, and retirement solutions—while offering a resilient portfolio of investments that deliver returns amidst heightened macroeconomic volatility and inflation are likely to increase their share of assets under management.

“The challenging macro situation and market volatility mean wealth managers’ client priorities are changing,” said Ramesh Punugu, Senior Director & co-head of Investment Research. He added, “leveraging technology to gain preliminary insights and adding specialised advisory would help wealth managers optimise their investment strategies. Amid the increasing need for more high-touch and personalised engagement, wealth managers also are focusing on equipping their advisors with the tools and dashboards required to ensure a value-added client engagement.”

Private wealth managers are focusing on addressing challenges posed by macroeconomic conditions and market fluctuations in 2023. Their main objectives include navigating uncertain periods, offering practical investment suggestions, diversifying portfolios, and safeguarding wealth. Prominent trends among global wealth managers encompass intergenerational wealth transfers, tailored products and services for women, holistic solutions, and resilient investments that balance risk and return. Looking ahead to 2024, expansion strategies involve venturing into emerging markets, boosting advisory revenue through tailored research services, increasing market presence through consolidation efforts, and embracing technological advancements and digital transformation.

Chanakya Dissanayake, Managing Director, Global Head of Investment Research, Acuity Knowledge Partners highlighted “the global landscape is uncertain and dominated by fast technological advancement, increasing regulatory scrutiny and ongoing market volatility. Wealth managers must continually recalibrate their strategies and adapt to the changing priorities.”

 

 

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