Sameer Datye goes through the top 10 trends impacting wealth management in 2021 on societal, technology & industry dimensions.
Normally, trends don’t dramatically change in short intervals. However, last year was certainly special. Be it the impact of the pandemic or the ideological/political disparity becoming more pronounced, the societal impact on the trends is certainly bigger than the changes in industry or technology. Let's examine briefly the top 10 trends in this blog. I will drill-down into them in follow-up articles in more details.
Commoditisation of investment advice, beating market benchmarks is passé. Wealth management is now holistic, goals-based and performance oriented aimed at achieving clients’ goals within agreed timeframes.
Sustainable investing has moved away over the year from being a fad to a clear trend. Compliance update in EU (MiFID II, Solvency II, IDD, UCITS & AIMFD) will lead to Eco Labelling Framework by Q4 2021. Furthermore, disclosure regulation as well as Taxonomy regulation will continue to be implemented in steps. The societal impact of investing (application of ESG - Environmental, Social, and Corporate Governance) is already becoming an integral part of core portfolio management strategy.
A change of guard from the old to the new is happening. Mandates (Advisory relations) and well as portfolios (inheritance) are transitioning from the older generation to the younger. With $68 trillions of Great Wealth Transfer well underway, the investor is changing. Ageing and retiring wealth advisory experts are leaving behind a shortfall that (hopefully) will be supported by technology.
Model portfolio allocation will not be enough. Investors will demand advice that is highly customised to suit specific needs, goals and ambitions. This is the result of growing awareness of the investors as well as availability of technology accelerators to make this happen.
The democratisation trend should not be viewed from the perspective of emergence of the retail investor alone. The instrument universe itself is expanding and allowing non-traditional opportunities - digital tokens, wine, art etc.
The technological disruption wave – the usual culprits – analytics, data mining, data advisory, digitalisation, access to huge databanks through custom APIs etc. As technology facilitates distribution disruption, it goes without saying that the pressure on fees/margins will continue to escalate.
A unique economic combination of low or negative interest rates, government infused liquidity, high debt, low growth, pandemic impact, trade wars bringing in a plethora of challenges and uncertainties.
There is now a continued convergence of brokerage and private banking models to serve affluent business clients. Robo advisories have brought in technology driven disruption in the competitive landscape.
Increased technological penetration has resulted in handling a unique set of security challenges and increasingly stringent compliance requirements. New and broader frameworks covering business practices as well as technology utilisation are evolving to protect the citizens and ensure business continuity at the same time.
Many underserved market segments, for e.g. women, are now being increasingly targeted with special customised offerings. The pandemic brought a bunch of 1st time investors to the market. So did the meteoric rise of the bitcoin phenomena- especially after serious institutional investors adding digital currencies to their portfolios.
Sameer is responsible for insurance and wealth solutions. He actively promotes open ecosystem thinking that powers our WealthMapper and Insurance-in-a-Box platforms. At TietoEVRY, he has a long experience of working within the Healthcare, Insurance and Wealth domains. Prior to this, he worked as a product manager and a brand manager in the food, processing and packaging industry. He is passionate about translating technology innovations to business reality leading to better quality of human life.