New Global Research Reveals How Wealth Management Firms Have to Reinvent Themselves to Thrive in the Next Era of Investing

Major new global analysis from a research coalition comprised of ThoughtLab, Deloitte, and FNZ, with support from Amazon Web Services (AWS) and Genesys and including views of 250 wealth management firms and 2,000 investors, shows that by 2028, the investment industry will look very different, with digital innovation and artificial intelligence (AI) essential ingredients of future success.

Senior executives around the world believe that technological, regulatory, competitive, demographic, and economic shifts will redefine investor expectations and reshape the industry:

• 55% of executives say born-digital firms will transform the wealth industry, and 52% of wealth management firms leading in digital transformation expect a dramatic industry shakeout.
• 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.
• 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 global 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 investment 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.

In response, investment providers are making technology a core competence, with 9 out of 10 midway or advanced in implementing a modernized, cloud-based platform. Increasingly, these are end-to-end platforms that wealth management firms use to digitize and automate operations, deliver cost savings, create innovative new business models, and generate new revenue streams.

These results are from a new study, Building a Future-Ready Investment Firm. The study included two worldwide surveys fielded in October-November 2023: (1) a benchmarking survey of senior executives from a cross-section of 250 wealth management firms, and (2) 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. Digitally transform client advice and experience. Technological advances are forcing changes to 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.
2. Make client diversity a business opportunity. Firms are going up-market, 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 to personalize solutions. They are also diversifying their advisor base to serve a more heterogenous clientele.
3. Drive performance through AI and digital innovation. Investment firms have made significant progress in various aspects of digital innovation, with 9 in 10 in mid-implementation or advanced in technology and process transformation—leveraging increased use of AI, data, and advanced technologies such as end-to-end platforms to shape their future strategies. The returns on their digital investments are remarkable: 44% report lower costs, 41% higher shareholder value, and 40% increased revenue.
4. 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%), environmental, social, and government (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.
5. 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.

Please download the full report here.

About the coalition

Research partners:

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 committed to opening up wealth so that everyone, everywhere can invest in their future on their terms. We know the foundation to do that already exists in the wealth management industry, but complexity holds firms back. We created wealth’s growth platform to help. We provide a global, end-to-end wealth management platform that integrates modern technology with business and investment operations. All in a regulated financial institution. We partner with over 650 financial institutions and 12,000 wealth managers, with US$1.5 trillion in assets under administration (AUA). Together with our customers, we help over 20 million people from all wealth segments to invest in their future. For more information, please visit www.FNZ.com and follow us on LinkedIn (@FNZ Group).

Research sponsor:

Genesys empowers more than 7,500 organizations in over 100 countries to improve loyalty and business outcomes by creating the best experiences for customers and employees. Through Genesys Cloud, the #1 AI-powered experience orchestration platform, Genesys delivers the future of CX to organizations of all sizes so they can provide empathetic, personalized experience at scale. As the trusted, all-in-one platform born in the cloud, Genesys Cloud accelerates growth for organizations by enabling them to differentiate with the right customer experience at the right time, while driving stronger workforce engagement, efficiency, and operational improvements.

Sponsors, advisors, and interviewees who participated in the study:

Jean-Francois Lagasse, Global Wealth Management Leader, Deloitte Switzerland; Kendra Thompson, National Wealth Management Leader, Deloitte Canada; Tony Wood, Asia Pacific Banking Leader, Deloitte Hong Kong; Tim Worner, National Wealth Management Leader, Deloitte Australia; Peyman Pardis, Head of Wealth Management, Deloitte Canada; Chris Künzle, Wealth Management Leader, Deloitte Switzerland; Matthew McWhirter, Wealth Management Leader, Deloitte Canada; Michael Hunwick, Wealth Management Leader, Deloitte UK; Alasdair Munro, Head of Marketing and Communications, FNZ Group; Carl Robertson, Group Chief Marketing Officer, FNZ Group; David Porter, Managing Director, Global Financial Services, Genesys; Julie Christie, Global Marketing Leader, Strategic Alliances, Genesys; Mark Smedley, Senior Industry Executive, Financial Services, Genesys; Rachel Faulkner Perez, Senior. Analyst Relations Manager, Genesys; Petar Arizanov, Executive Director – Investments, Oppenheimer & Co.; Janet Yuen, Head of Digital Servicing and Journeys, HSBC; Brie Williams, Head of Practice Management, State Street Global Advisors; Sumedh Mehta, Chief Information Officer, Putnam Investments; Jaime Lazaro, Head Asset Management & Global Wealth, BBVA; Yoni Assia, Chief Executive Officer, eToro; Amy Butler, Global Head of Public Relations and Communications, eToro; Nathan Erickson, Principal, Financial Advisor, CAPTRUST; Henning Stein, Fellow, Cambridge University Judge Business School; April Rudin, Chief Executive Officer, The Rudin Group; Michel Longhini, Group Head Global Private Banking, First Abu Dhabi Bank; Dean Butler, Managing Director for Retail Direct (D2C), Standard Life UK; Vinod Raman, Chief Product Officer, Asia-based fintech; Kevin Barnes, North American Head, BMO Private Wealth; Giorgio Pradelli, Group CEO, EFG Group; Danielle Skipp, Managing Director and Chief Legal Officer, Nicola Investments; Aharon Kagedan, Chief Product Officer, Canada, RBC Wealth Management; Michael Cahill, Senior Policy Advisor, PIMFA; Payal Raina, Founder, Fintech B2B Marketing

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