Expert comment

We see several trends that will make their mark on the industry in 2020. Firstly, uncertainty from continuing political and economic events will continue to drive investor caution. UBS has already reported that the combined wealth of the world’s billionaires, suffered its first decline, since 2015.

Secondly, we see the continuation of important societal shifts including significant intergenerational wealth transfers particularly from baby boomers to millennials. These shifts are already leading to diversity in the client base with women expected to control a substantially larger share of the wealth going forward. Thirdly, we see the increasing impact of behavioural trends and the need for wealth managers to adapt their offerings. This manifests itself in the trend towards the client segment of one and hyper-personalisation.

The importance of data and analytics in this shift will be pivotal as new offerings gain momentum. In particular, millennials will express their concerns about climate change and the environment, by actively seeking out impact and ESG investments, bringing them squarely into a mainstream asset class.

We also expect to see a more rapid take-up of new digital technologies to facilitate new forms of advisor and client interaction, including holistic client management extending into lifestyle and personal well-being support. New operating models will emerge which can seamlessly integrate regulatory, compliance and security augmented by artificial intelligence and machine learning. Beleaguered CTO’s will finally get a break with the increase in cloud-based computing and blockchain technology which will help address some of their cost challenges.

Finally, all these highlighted trends together, will have a profound impact on the traditional wealth management value chain. The changes will make it even more challenging for Wealth Managers to achieve their growth and financial performance targets.

In conclusion, 2020 will be a year of significant change for the wealth management industry. It will be important for firms to be vigilant in anticipating and addressing the new and emerging industry trends. To help firms successfully anticipate and adapt to future change, Orbium is currently undertaking a C-level survey of executives in Europe and Asia, to get their perspectives on where they expect to see the most significant future changes and how they plan to succeed.