The wealth management industry is undergoing significant transformations driven by technological advancements, evolving client expectations, and regulatory changes. External asset managers must stay abreast of these developments to maintain a competitive edge and deliver exceptional service. Thus, we want to provide you with the current information on the top 5 most important trends shaping the industry today!
Table of Contents
Integration of Artificial Intelligence and Advanced Analytics for External Wealth Managers
Artificial Intelligence (AI) and advanced analytics are revolutionizing wealth management by enhancing decision-making processes and operational efficiency. AI algorithms analyze vast datasets to identify investment opportunities, assess risks, and personalize client experiences. Such solutions are already widely implemented across larger organizations, but the future brings them closer to the smaller players as well.
External asset managers now have access to tailored, AI-driven platforms. What once were expensive solutions that only the big players could afford have now become industry standards, therefore smaller players can also leverage AI to gain a competitive advantage. Research conducted on the topic further solidifies these wealth management trends; according to a recent survey by PwC, 81% of global asset managers and institutional investors plan to pursue strategic partnerships or acquisitions by 2028 to integrate AI capabilities into their operations.
Emphasis on Environmental, Social, and Governance (ESG) Investing
Clients increasingly prioritize investments that align with their values, leading to a surge in demand for ESG-focused investment strategies. According to Capgemini’s Wealth Management Top Trends 2024 report, integrating ESG assets is a strategic priority for wealth managers aiming to stay ahead in the dynamic wealth management landscape.
At the same time, this prompts a negative tendency—investment greenwashing. Therefore, external asset managers will not only need to look for ESG investments but also for solutions that will enable them to identify and eliminate those investment opportunities that claim to be sustainable, but fail to meet true environmental, social, or governance standards.
Digital Transformation and Client Experience Enhancement
The shift towards digital platforms has transformed client interactions and service delivery in wealth management. Clients now expect seamless digital experiences, including online portfolio access, digital communication channels, and personalized services—especially since the industry is undergoing the Great Wealth Transfer and the clients are getting younger and more adept in digital technologies.
Regulatory Compliance and Risk Management
AML fines have been haunting financial organizations for years. Regulatory compliance is more important than ever—a tiny mistake may cost a business thousands of dollars. Therefore, external asset managers need to put even more stress on ensuring compliance and support such efforts with digital technologies for automated incompliance detection.
Mergers, Acquisitions, and Strategic Partnerships
Finally, the wealth management industry is experiencing a wave of mergers, acquisitions, and strategic partnerships to expand service offerings, access new markets, and integrate advanced technologies.
Financial News reports that major asset management firms and private equity groups are pursuing partnerships to offer complex investment products to retail and affluent clients, indicating a broader industry trend. External asset managers need to adapt and increase the complexity of their services or engage in similar partnerships.
The Takeaway
Staying informed about these trends is essential for external wealth managers to adapt their strategies, leverage technological advancements, and meet evolving client expectations. Many of these require tailored technological solutions. However, such options are already available in 2024, so now it is all up to you—it is time to invest in a good wealth management platform.
