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January 24, 2024updated 25 Jan 2024 10:02am

Report: 10 resolutions for wealth management success

EY Global Wealth and Asset Management group’s 2024 outlook report presents 10 ‘resolutions’ that leaders and organisations should adopt in 2024

By Spear's

The democratisation of investment markets and the expansion of all-round service offerings are among the 10 trends that wealth and asset management leaders should embrace this year, a new report claims. 

EY Global Wealth and Asset Management group’s 2024 outlook report presents 10 ‘resolutions’ that leaders and organisations should adopt as they ‘aim for success this year – and beyond’.

[From the magazine: Family offices: is the private equity party over?]

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Mike Lee, EY Global Wealth & Asset Management Leader, tells Spear’s: ‘The macroeconomic events of the last couple of years have been challenging, and the role of wealth managers is transforming. Those leading firms (or poised for success) are placing a greater emphasis on co-creating resilient strategies with clients that manage uncertainty focused on long-term outcomes.

‘There is an evolution taking place in the industry around expanding access and inclusion, with wealth advisors casting a wider net around who exactly could benefit from their services beyond traditional wealth segments.’

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‘Involve investors in expanding and integrating services’

Wealth and asset management customers increasingly expect a ‘holistic, bespoke service that is adapted to their needs and meets their requirements’, according to the outlook. Firms should consider broadening their existing offering by partnering with other companies to deliver an all-round service that takes in everything from tax and trusts to healthcare, alongside traditional financial investments.

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There should also be an emphasis on the importance of wealth transfer – between spouses and generations – and the role it plays in client retention. To maximise the success of such expansion, firms should involve clients in co-developing services – ‘nurturing a “teach-me, join-me” dynamic — and allow them to select their preferred level of involvement’.

Broaden investor access

Changing investor demographics (owing to ageing, urbanisation, migration, increasing female economic power and growing personal responsibility for retirement) are creating more complex patterns of demand. This growing pool offers growth opportunities but also the challenge of differentiated needs. 

Wealth management firms are already responding to this by working to democratise access to investments, including alternative assets, and should continue to offer mass affluent and retail investors the types of products that have traditionally been limited to wealthy clients.

[See also: Private markets: should individual investors take the plunge?]

The report advises: ‘They should further develop the use of interval funds, business development companies, European long-term investment funds (ELTIFs) and long-term asset funds (LTAFs) as primary vehicles. Firms should also evaluate preferred commingled product vehicles, and the future potential of providing digital wrappers via tokenisation.’

The pressing need for a greater leadership on sustainability is also highlighted, as is the necessity to ‘collaborate – and innovate – on regulation’, both in-house and within the wider industry. 

The benefits – and risks – of artificial intelligence

Technological and organisational changes are the focus of a few resolutions, including ‘building a scalable platform for profitable growth’, ‘integrating internal technology and external eco-systems’ and ‘modernising data’. There is also a need to ‘optimise the value of talent’ by upskilling existing employees alongside attracting staff in areas including private credit and artificial intelligence (AI). 

[See also: How should UHNWs protect against the risks of AI?]

Unsurprisingly, artificial intelligence features significantly in the wealth management report. ‘As AI and GenAI become more capable and pervasive, wealth and asset managers will need to understand and embrace the technology in order to improve efficiency and meet investor expectations,’ the report reads. ‘In contrast, the careless or irresponsible use of AI will pose a growing potential risk.’

Firms must ensure a transparent and ethical approach to AI with strong cyber controls and testing in place, while harnessing the technology to ‘ transform middle-office operations, improve asset valuations, strengthen internal next-best-action frameworks, generate code, enhance investment research and automate workflows’ .


The 10 resolutions for wealth management success

1. Build a strong brand identity: as an organisation or leader, we resolve to differentiate our unique value proposition, our distinctive brand and a strong sense of organizational purpose in our chosen markets.

2. Build a scalable platform for profitable growth: resolve to develop strategies for sustainable, profitable growth for the benefit of all stakeholders — using a scalable platform for future expansion, adaptability and partnering.

3. Modernise data: resolve to continually modernise our data infrastructure to maximise the availability, usability, adaptability and security of public and private data.

4. Integrate in-house technology and external ecosystems: resolve to harness the power of internal and external ecosystems — using partnering and integrated technology platforms to enhance performance, scalability, transparency and profitability.

5. Use AI intelligently: resolve to be proactive, transparent and targeted in our use of AI. That includes effective governance, a focus on efficiency, unified data and robust model testing.

6. Optimise the value of talent: resolve to maximize the value of new and existing talent through a strategic program of reskilling and upskilling — readying our people for changes in client demand, technology, products and industry practices.

7. Show transparent leadership on sustainability: aim to develop a consistent, comprehensive and transparent approach to sustainability, optimizing investor alignment and taking an enterprise-wide view of implementation.

8. Collaborate – and innovate – on regulation: resolve to make better use of technology and innovation — and to partner with other market participants — to increase regulatory engagement, efficiency and quality.

9. Broaden investor access, increasing engagement and inclusion: resolve to enhance investor access to a full range of products, advice, and education — increasing investor engagement and providing better outcomes to a larger pool of clients.

10. Involve investors in expanding and integrating services: resolve to broaden our service capabilities, to develop holistic and integrated offerings and to strengthen this process through greater client involvement and co-creation.

Source: ey.com

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