The wealth management industry has been subjected to its fair share of change in the last few years, says Mike Rothwell, Director, Country Head - Channel Islands, Pershing EMEA

Crystallised by the Covid-19 pandemic, firms are expected to deliver a service that meets the needs of clients wherever they are in the world, at any time, with advice tailored to their individual lifestyles and preferences. For an industry with as much legacy as wealth management, the transformation has been significant.

But the change has been necessary. In this day and age, firms that cannot cater to the constantly-evolving interests of their clients risk falling behind their competitors. This is particularly true when considering the pace at which wealth disruptors are entering the market, and the success they have had in attracting clients from traditional managers. 

How, then, to ensure firms remain competitive against the current backdrop?

New people… 

The typical profile of a wealth creator has evolved significantly in recent decades. How people make their money has changed, and wealth managers have a growing proportion of younger, more entrepreneurial individuals on their client books. That said, traditional inherited wealth remains an important part of the industry landscape.

As a result, client segmentation is an increasingly critical part of wealth managers' approach to client service. They need to decide who they want to serve. Not all wealth management and advisory firms will have the bandwidth to service all types of clients. This does not only impact the day to day service. 

An intentional, strategic approach to client segmentation is required as it will impact firms' existing and future business models - from onboarding, to the type of service provided, to the technology infrastructure needed to support an evolving approach to client service. Ensuring this does not detract from firms' pursuit of opportunities will be an important balancing act. 

… new places

Greater global interconnectedness has given rise to the emergence of new centres of wealth creation, beyond the traditional "hubs" of the UK, Western Europe and North America. For many firms, this is an opportunity to increase their global footprint and gain greater market share. But there are considerations.

Servicing clients in a new region often requires firms to take a step back, observe the different cultural, financial and regulatory models in a given country, and adapt their approach accordingly. In many parts of the world, transplanting the service model used in the UK, for example, onto a new cultural backdrop will have the adverse effect. It can alienate prospective clients and create a disconnect between what wealthy individuals need, and what they believe a firm is prepared to offer.

For advisers, the emphasis is on taking a strategic approach to priority regions. Breaking out of the one-size-fits-all mentality with unique, market-specific activation tactics will help companies grow their footprint overseas. 

Personalising your offering

It's clear that firms face a significant challenge in tailoring their offering to emerging profiles of wealthy clients, from the young and entrepreneurial to the increasingly international. 

It's critical that advisers appreciate the new and different ways that clients want their money managed, based on their personal preferences.

The growth in public dialogue surrounding social causes like climate change and human rights has given way to a stronger focus on philanthropy, and using wealth to "do good" on a global scale. The historic emphasis on managing wealth to provide support and opportunities for clients' families is only half of the story in what is becoming a more socially-conscious high-net-worth community.

The Consumer Duty implementation later this year will put further emphasis on the importance of good outcomes for end investors. Firms that can leverage their flexible business models will be well-positioned to meet growing regulatory requirements when it comes to client servicing.

The same focus on tech

Wealth managers' investment in digitalisation has accelerated of late. The pandemic was a huge catalyst for this, but it has also revealed the role technology will play across a firms' offering in the long-term. 

For example, technology will be critical to how firms continue to evolve their client service. Finding ways to deliver greater personalisation and the tailoring of investment solutions to each clients' interests will be heavily dependent on firms' access to digital tools. These will also play into the interfaces clients have access to when it comes to managing their own portfolios, such as mobile apps and online banking services. 

Technology will also be critical to delivering the research needed for investors to make decisions over new asset classes, such as private assets and crypto products. 

The solution is self-explanatory; don't neglect your tech investment. The wealth management industry was already a late-bloomer in this context; firms don't want to lag behind more than they already do.

Firms do not want to find themselves exposed or behind the curve when it comes to the trends shaping the future of the industry. Finding partnerships in this environment becomes increasingly important.

The right partnership can help to drive efficiencies and reduce operational burdens, while also allowing companies to use their resources better to innovate and grow. In a fast-moving and evolving environment, it is important not to get lost in the noise, and companies need to remain focused on their core responsibility: providing the best service to their clients.