The wealth management industry is evolving, and several innovations and trends are shaping its future.
Wealth creation, customised investment strategies, digitalisation, succession planning, and access to alternative asset classes are some of the key areas of focus.
The industry is moving towards deeper engagement with clients, ensuring there are no conflicts of interest between the client and their wealth manager.
As the industry grows, it is expected to provide opportunities for geographical expansion beyond metropolitan cities. Here are a few trends to keep an eye on this year.
1. A robust wealth creation engine: The wealth management industry will continue to grow in terms of wealth creation, especially from the tech and finance sectors. However, there is also likely to be a renewed focus on manufacturing and other allied sectors, which could become new sources of wealth creation. Geographical expansion beyond metros is also expected to provide growth opportunities.
2. Awareness versus engagement: While the first phase of the industry was focused on creating awareness about different asset classes and products, the industry is now moving towards deeper engagement with clients. Customized investment strategies that take into account client's needs, risk appetite, and behavioural biases, as well as succession planning and wealth structuring, will be key areas of focus. The engagement model will aim to ensure no conflicts of interest between the client and the wealth manager.
3. Digitalization and adopting artificial intelligence/machine learning: While wealth management will remain a last-mile job, digitalization is expected to enhance the client experience through more effective reporting, analytics, and communication. This will also help wealth managers scale up their operations and improve overall efficiency.
4. Succession planning and wealth structuring: The importance of succession planning and wealth structuring is likely to grow as second and third-generation global citizens become more involved in safeguarding and growing their family wealth.
5. Access to alternate asset classes: There is likely to be a continued rise in interest in alternative asset classes such as venture capital, private credit, and real assets among HNWIs and family offices. While these asset classes may experience cycles, interest in them is expected to continue to grow over the long term.
6. Deeper listed markets: As listed markets become deeper, more nuanced investment strategies are likely to emerge around these asset classes. The rise of quant and AI technologies will also play a key role as reliable data becomes available over 15-20 year periods in these asset classes.
As these trends shape the future of wealth management, wealth managers and investment specialists need to keep up with these developments to remain competitive and ensure they preserve and protect their client’s wealth.
(Sahil Kapoor is the Senior Executive Vice President at 360 ONE Wealth)
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.