Future of Wealth Management Accenture

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2 Future of Wealth Management,THE NEW FACE,MANAGEMENT. A course change looms for firms,of all sizes and clientele. Wealth management as we know it is obsolete, The days of one to one product led advisement are now as dated. as yesterday s news The coming of age of a new type of client. new digital options such as robo platforms and a plethora of. new regulation combine to completely change the playing field. The savvy wealth management C suite officer strives to see. the entire picture fitting the pieces together to facilitate charting. a course for the future, Digitally led hybrid advice differentiated for client experiences. is upon us already This model is so completely different from. what most firms have built upon that it requires rethinking and. retooling now for a new breed of client coming into its own. The inclination to label these shifts a passing trend may be tempting. but it is not accurate Dealing with these shifts is essential to remain. relevant in an industry that looks very little like its predecessor. Future of Wealth Management 3,FIVE TRENDS,CONVERGED TO.
CREATE THE NEW,1 COMPETITION INTENSIFIED, In a mature market where everyone is looking for new growth. opportunities other financial institutions have broadened their. reach into your client base Pure digital portfolio management. platforms like Wealthfront and Betterment are only the beginning. Non financial players and online wealth managers are expected. to gain ground over the next several years with nonfinancial. players increasing to 20 and online wealth managers increasing. to 30 by 2018 1 Google is serious enough to have commissioned. a study in 2014 on how it could enter the asset management. arena 2 hoping to compete by disintermediating entire industries. becoming the gateway for information and decision making. 2 DEMOGRAPHICS SHIFTED, Demographics shifted and continue to do so Women will soon. control a larger share of assets as single divorced and surviving. spouses grow in number Millennials will surpass Baby Boomers as. the largest generation bringing their digital expectations with them. 3 CLIENTS BROUGHT NEW EXPECTATIONS, Clients brought new expectations to the table Today s population. demands transparency and control in wealth management just. as they do in education consumer goods and other industries. They are vocal in their desire for lower fees no longer will loyalty. keep them in one place Ninety percent of Baby Boomers rank. fee structure as important in selecting an advisor with 91 percent. of Gen X and 93 percent of Millennials saying the same 3 Goal based. planning advice led rather than product led is key to winning. the new breed of customer,4 Future of Wealth Management. 4 DIGITAL HAS ARRIVED, Digital has arrived and will only grow in prevalence as it fuels agility.
and efficiency in wealth management practices While most firms. today are skeptical of virtual interactions 76 of investors disagree. with the statement that digital technology limits facetime or reduces. the quality of the advisor relationship 4 Investors overwhelmingly. value collaborative relationships enhanced by digital technology. 5 REGULATION, Need we say more Your teams deal with increased regulation. around fraud prevention fiduciary responsibility and other areas. impacting the industry on a growing basis Practices are forced. to reconstruct key areas of business to comply,Future of Wealth Management 5. NEW CLIENTELE,NEW BUSINESS MODEL,Your new clients are in some cases. your old clients These include those,that perhaps have been underserved. as well as some truly new faces Women,and Millennials will comprise a much.
larger portion of your client mix,A few reasons underlie this shift. TRADITIONAL CLIENTS, Traditional clients are approaching the wealth transfer age in. North America the average age of a wealth client is 63 We are. approaching the largest transfer of assets ever due to an aging. global population In North America alone over the next 30 to. 40 years an estimated 30 trillion will change hands5 much. of it going to women spouses and the next generation. MILLENNIALS, Millennials are becoming the largest generation As they come of. age financially these career minded tech savvy potential clients. will account for almost three quarters of all income by 2025 6. Eighty four percent of Millennials said social opinions influence. their purchase decisions 7 which requires traditional firms to up. their social media presence and strategy Sustainability is key in this. client segment as firms like Kiva are disrupting the broker model. by allowing investors focused on sustainability to invest directly. in small and medium sized enterprises that support the greater. good 8 Younger investors not only perceive these companies as. socially responsible but they also feel that they are directly helping. to start new businesses and grow economies, Women s earning power continues to rise As more women choose. to remain single or divorce they look to support themselves and. the next generation for years to come Globally women account. for 40 percent of the workforce but hold only one percent of. the wealth 9 Over time wealth ownership by women will grow. dramatically as the imbalance between workforce composition and. asset ownership corrects Career minded women want a new breed. of wealth management communicative and efficient interactive. with frequent touchpoints 10, Some firms have already been shifting their advisor workforce.
mix for some time anticipating a changing customer. 6 Future of Wealth Management,GOAL ORIENTED INVESTING. This changing customer requires an approach that meshes. with goal oriented investing Investors always have asked for. outcomes but their requests were met with a product menu. that either the investors or their advisors needed to sort In the. future wealth managers will be selling outcomes not traditional. investment products, Recent increases in target date funds is one example of investors. taking a more outcome oriented approach Target date funds. marketed to U S clients seeking to save for retirement have. accumulated assets in excess of 650 billion according. to Morningstar 11,But funds with a retirement objective. are only one target date opportunity,In the future wealth managers. Funds can be developed to cover will be selling outcomes not. college tuition transfer wealth, at a pre determined age and achieve traditional investment products.
many other financial objectives, Outcome oriented investing is not limited to mutual fund offerings. in their current state Firms could provide useful insights to clients. who are independently managing their own portfolios Often. professionally managed portfolios include different buckets. of investments designed for spending generating cash flow. or appreciating over the long term Investors could design their own. portfolios by choosing different allocations for each bucket of assets. This is essentially self serve outcome oriented investing for those. who choose to buy their own products instead of paying an advisor. Programs similar to annuities or private pensions represent another. objective driven option Clients invest over a long period of time. and receive a cash flow payout at the end of the term The cash. payout could be for a variety of objectives including education. and retirement While these outcomes are expected they are. not guaranteed So the client not the investment firm retains. the risk which could help firms combat government mandated. capital restrictions and fee pressure Improved and intuitive. data visualization available to wealthy consumers increases. transparency and causes fee convergence for product types. this will be particularly impactful for more opaque products like. today s annuities Future private pension like products may still. utilize withdrawal restrictions to enable investment in less liquid. strategies to improve the risk return profile This presents an. opportunity for alternative products to become more mainstream. as they would play a role in these outcome oriented portfolios. Target date funds and private pensions are only a two examples. of the potential for outcome oriented investment products. Firms already are experimenting with this approach BNY. Mellon Merrill Lynch and a variety of other wealth managers. offer objective based portfolio management approaches 12. Future of Wealth Management 7,QUESTIONS TO ASK,YOUR LEADERSHIP TEAM. Even if you are clear on the changing,market and client you may still want. to ask the right questions for driving,change within your organization. At a minimum these are the questions,we encourage you to bring up with.
your teams,WHAT IS OUR FUTURE VALUE PROPOSITION,FOR THESE NEW CLIENTS. The advancement of the mass affluent and direct advice model. are eroding the traditional high net worth offering The mass. affluent segment now expects offerings similar to those available. to high net worth clients, New demographic segments are already demanding lower fees. which preclude an exclusively one to one environment between. advisor and client The advisor value proposition is becoming. harder to justify as emerging digital platforms are offering similar. services at a fraction of the cost, As clients demand access to digital driven experiences for. investment management we see the new value proposition. as delegated robo based investment management offerings. complemented with access to advisors for financial and retirement. planning Utilizing a pay as you go fee model clients are put. at the forefront of the decision making albeit in guided fashion. 8 Future of Wealth Management,WHAT DOES INCORPORATING A HYBRID MODEL. REQUIRE US TO CHANGE IN OUR BUSINESS, The shift to more DIY models as well as a tech savvy customer.
bases requires greater transparency and control for your end clients. Pay as you go advice is necessary across all wealth segments. no longer just in the mass affluent sector, Customized holistic advice that moves beyond portfolio returns. and distributions is coming to the fore From household financial. planning to business finances clients require a broader and deeper. conversation than advisors have traditionally provided. Digital access and collaboration Secure document sharing and. sites built for mobile devices are considered de rigueur by your. newest client segments, Low fee investment options are a must and the new breed of. competitor is providing them From guided portfolios to actively. managed ETFs clients want value without high cost,WHO IS THE NEW COMPETITOR AND HOW. DO WE ADDRESS THE THREAT, Think beyond start ups to more unusual competitors Snapchat. for instance has expressed interest in developing a robo advice. platform to capitalize on their captive audience Millennials 13. These new entrants could be formidable given their familiarity. with the new generation of wealth as well as their digital savvy. Robo advisor platforms are forecasted to reach 2 trillion by 2020 14. Regardless of whether offered by social networking companies. startups or traditional leaders they will be the cornerstone. to any new wealth management offerings,WHAT NEEDS TO SHIFT TO GO FROM.
PRODUCT LED TO ADVICE LED COUNSEL, Your cross sale and collaboration strategies should change when. moving to advice led counsel Advice led counsel is around best. servicing your client from the client s sum total perspective rather. than selling from the typical firm siloes via individual products. HOW CAN DIGITALIZING HELP US REDUCE,COSTS AND BETTER SERVE CLIENTS. In addition to efficiencies gained digital is also just the cost of. doing business in today s wealth management sector Clients want. a variety of touchpoints 24 7 access and the ability to self service. Digital is the only way to meet those demands and can free up. funds from increased efficiency to reinvest in the business. Future of Wealth Management 9,DIGITALIZATION MAKES ADVISOR CLIENT. COLLABORATION EASIER, No longer relegated purely to one on one meetings a regular. digital dialogue with the client as well as advanced analytics. to determine needs patterns is now possible Frequent. touchpoints taking far less time and effort than previous less. frequent meetings provide for a new type of relationship. and advice one that is more real time when necessary. CLIENT CONNECTIVITY HAS NEVER BEEN,MORE HASSLE FREE.
Social media video online portals and the like not only improve. client connectivity they help an advisor better determine a. client s changing needs While nothing replaces a conversation. client s spending saving and investing habits can be more. transparent more quickly to advisors utilizing digital tools. allowing a better tailored approach for individual needs. A PERSONALIZED EXPERIENCE BECOMES, Experience led design from the user s perspective enables. the client to complete tasks effectively efficiently and intuitively. And allows each user only to see what is necessary and applicable. rather than wading through a standard stable of products and. services of which they may only require a fraction. Firms could make available multiple levels of personal advice. No assigned personal advisor, An assigned virtual advisor who does not meet face to face. Future of Wealth Management 3 THE NEW FACE OF WEALTH MANAGEMENT A course change looms for firms of all sizes and clientele Wealth management as we know it is obsolete The days of one to one product led advisement are now as dated as yesterday s news The coming of age of a new type of client new digital options such as robo platforms and a plethora of new regulation combine to

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