Seven Strategic Wealth Management Trends You Need To Know About – Episode 42
The wealth management industry is evolving very rapidly, and client expectations are shifting. Technology is playing a bigger role, and alternative investments are becoming more mainstream. Understanding these trends is crucial for advisors who want to stay ahead.
With that in mind, CEG Insights surveyed more than 2,500 affluent investors on a range of topics about their investing and their advisor relationships. We identified seven key trends occurring in wealth management that all advisors need to be aware of so they can position themselves for greater success in the coming years.
KEY TAKEAWAYS
- Clients expect you to address topics around alternative investments and thematic investing.
- Focus more on clients’ estate planning and wealth transfer concerns.
- Communicate the value you bring to clients so they’re clear on the benefits you deliver.
Trend 1: The need for better education about alternative investments. Affluent investors are interested in alternatives, for reasons such as portfolio diversification and higher potential returns. But we found around 60% of investors feel there are barriers preventing them from investing in alts. The two most common barriers cited: insufficient expertise (35.7%) and uncertainty about risks and returns (34.5%).
Advisors should consider educational toolkits that include infographics and one-page explainers about alternative investments. They might offer short videos that break down key concepts, or case studies.
Trend 2: The growing influence of Millennials and Gen X clients on investment strategies. Millennials and Gen Xers are making up a growing percentage of the HNW market, as Baby Boomers move deeper into their spending years. And these younger cohorts differ from their elders in some important ways advisors need to understand. Millennials and Gen Xers are more comfortable with risk. They want investing to be personalized and value-based. They’re drawn to more thematic investments and more interested in ESG, as well as investing in technology and healthcare innovation.
Advisors need to segment their client base by generation and adjust their message for each one they serve. Mobile access and digital engagement may be more important to younger clients, for example. They also need to provide access to values-based investment options. Ultimately, advisors need to understand how each demographic wants to be served and communicated with, and make necessary adjustments to reflect those preferences.
Trend 3: A need for more estate planning/wealth transfer services. We found that while, 95% of investors say they want wealth transfer advice, only around one-quarter of them say they’re getting it. That’s a major service gap that advisors can close by taking three steps:
- Proactive client reviews each year that focus on updating wills, trusts, beneficiaries and so on.
- Collaboration with estate planning experts who can offer innovative solutions and make it easier for clients to take action in this area.
- Leverage digital tools such as estate planning software that lets clients visualize how their assets will transfer.
Trend 4: Rethinking market volatility’s impact on client confidence. Advisors often assume they’ve trained their clients to ride out volatility. But the number one reason investors gave for rethinking their asset allocation and portfolio structure was “a major downturn in the market.” The second most popular reason was “a major economic downturn.”
It’s crucial to reach out to clients during periods of uncertainty and instability—even if you think there’s no way they’d be worried. Build a “bear market toolkit” that spells out how and when you’ll reach out to clients, and the framing and messaging you’ll share to reassure them. Advisors who contact clients when times are stressful often find themselves winning new business and capturing additional assets from existing clients.
Trend 5: Fees and value. Increasingly, clients want to understand the benefits they’re getting for the fees they pay you. If they perceive that they’re getting value, fees become almost a non-issue for them. That means your communications and conversations with clients should include ways in which you help them both pursue opportunities and avoid making costly mistakes. If you make it clear that you’re their real-time strategist who can guide them through whatever conditions come their way, you’ll have no trouble justifying your fees.
Trend 6: Digital client engagement. Millennials want access to advanced digital tools—a key piece of information if you’re serving or looking to serve that cohort. Consider including digital reporting, interactive client portals, scenario planning and AI-driven insights in your offerings to this segment. Also, be sure to let clients know you have these tools available for them.
Trend 7: Increasing popularity of alternative and thematic investments. More investors today are expressing interest in private equity, natural resources and ESG themes. When asked how important it is for advisors to discuss private market investments with them, roughly 80% of investors said it was important to discuss them frequently or occasionally. This includes areas such as private equity, venture capital and private real estate.
Of course, those discussions might focus on how such assets fit into a client’s portfolio or how those assets do not make sense for a particular client. The key is to bring up these areas of interest with clients and address them directly.
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