Why Wealth and Asset Managers must innovate

Yet it would be naive not to recognise that the pace of change has increased significantly over the past few years. And with that, so has the sector.

Supply side disruptions are creating new opportunities as technologies and new business models enable wealth and asset managers to streamline their processes and democratise their products – thereby allowing the market to grow considerably. This is pervasive across the industry, as asset managers consolidate systems, integrate with third party ecosystems and partner with data providers and platforms to create connected and flexible front to back architecture to drive efficiency and agility.

And AI is a key driver of this change. It is incredibly clear that the technology is changing the way wealth managers not only market their products, but also how they serve their clients. AI is already enabling managers to profitably expand their client base into slightly lower net-worth segments. one or two rungs below the traditional high net worth.

This positions the industry to better support the long-term shift from DB to DC pension schemes, which has been long in the making but is already impacting, and will further materially increase, the demand for wealth and asset management services as boomers look for help investing their retirement savings.

But there remain double-edged swords. Asset classes have changed over the past few years as investors become more comfortable with the role of crypto in their investment portfolios and managers introduce private credit out to retail markets. These present huge opportunities but with attendant increased complexity and risk.

And let’s not forget the influence that consumer duty and related advice regulations has on the sector. At a time when demand for advice is skyrocketing, the industry’s ability to efficiently address client needs within the regulatory guard rails continues to define the industry and influence growth and decision-making.

If this were just one slow-moving risk or even a handful of transformative changes, then treating this as another false storm that wealth and asset managers could manage through normal BAU might be a viable plan. But we are seeing a massive, multilayered and integrated transformation that is moving rapidly across the market. Doing nothing and waiting it out is not an option.

In this environment, wealth and asset management executives need to be able to rapidly assess the impacts and implications of these fast-moving trends. They need to understand how they might shape their business going forward. And they will need to develop and adopt innovative ways to respond and remain relevant in their chosen markets.

Deep insight, diverse perspectives and practical experience are all required, which are often not readily available in house, creating an urgent need to adopt a flexible approach to supplement existing talent with targeted expertise. A clear vision and speed of action will be paramount to firms successfully managing businesses through this change.