Global demand for more holistic approaches to wealth management is growing. Our research suggests that three complementary elements will be key to developing wealth services that can increase the financial well-being of clients and their families.
The first of these is diversification. All client groups see growing value from a wide spectrum of products and services, with investors expecting to diversify the financial products they use from an average of 4.1 product types today to 5.5 by 2024. Demand for diversification is strong in Asia-Pacific, where clients anticipate using an average of 6.1 financial products within three years.
Most notably, investors expect to make much greater use of alternative investments. Definitions vary among markets, but increasingly include hedge funds, private markets, real estate, infrastructure and commodities, as well as digital assets such as cryptocurrencies. One in three clients invests in alternatives today, but this is projected to reach 48% by 2024.
The second key element of future wealth services will be more tailored advice. Our research shows increasing demand for planning services, with the proportion of investors using estate and tax planning expected to grow from 30% today to 44% and 45% respectively by 2024. The appetite for personalized financial support is especially strong when the transition between life stages increases clients’ personal responsibilities.
The third leg of next-generation wealth management will be enhanced protection. The COVID-19 pandemic accelerated the wellness agenda, and clients increasingly expect wealth providers to protect their financial, physical and emotional well-being and that of their families. The need to protect clients’ interests extends from hedging against market volatility to maintaining personal health.
The need to deliver richer, tailored and more holistic services in the future will have profound implications for wealth managers’ service models. Many firms will want to enhance their ability to partner with other companies. That includes technology providers and other financial providers, such as alternatives managers or health insurers. Excellent data management, alignment with client goals and building technology connections will be increasingly vital. In some circumstances, it may even mean collaborating with rivals, using “co-opetition” (collaboration with competitors) to provide clients with niche investments, local expertise or customized protection.