At Quantfolio’s Wealth Meetup event in Oslo on September 19th, 2024, EY partners Kristin Bekkeseth and Anders Andenæs highlighted four key trends shaping the wealth management industry: intensified competition, heightened price sensitivity, shifting asset allocation, and accelerating consolidation.
Globally, an estimated $68 trillion of wealth held by baby boomers is set to be transferred to the next generation over the coming decades—a phenomenon known as the Great Wealth Transfer. Gen Z and Millennials, inheriting this wealth, exhibit notably different preferences from previous generations. They demand digital tools for investment management and desire personalized investment solutions aligned with their unique goals.
From Quantfolio’s event at Sommerro, Oslo
Aligning with Client Preferences
Research from ThoughtLab reveals a disconnect between how wealth management firms aim to differentiate themselves and what clients prioritise. While most firms emphasise personal relationships and investment performance as differentiation strategies, clients increasingly want intuitive digital experiences and actively managed, tax-efficient products.
To meet the evolving demands of clients, wealth management firms should focus on offering a broad range of funds and enhancing the digital user experience.
Embracing Flexible, Scalable Technology
The demand for personalized portfolios, coupled with regulatory changes, underscores the need for scalable, flexible technology. Quantfolio’s wealth management platform, built around microservices, provides this flexibility. Each microservice operates independently or in combination, allowing firms to design custom user journeys that cater to specific needs of different wealth segments. Clients can choose to consume white-label frontends or simply build themselves utilising APIs.
Differentiating in a Competitive Landscape
As competition intensifies, wealth managers must differentiate themselves. Catering to diverse wealth segments, from retail to private banking, can be challenging and offerings should include a wide selection of investment products and tailored portfolio solutions aligning with needs of each client.
An emerging trend among the mass affluent segment is the inclusion of illiquid private equity in their portfolios.
However, recommending products requires careful assessment of an investor’s knowledge, experience, and risk tolerance. LocalTapiola, one of Quantfolio’s clients, recently launched a private equity fund targeting high-net worth individuals and the mass affluent segment where demand for more sophisticated products have intensified.
Offering private equity and other alternative investment products can be a good differentiation strategy in the competitive market of wealth management.
Conclusion
As investor preferences evolve, wealth management firms must adapt by offering intuitive digital experiences, a wide range of actively managed, tax-efficient products, and tailored portfolio solutions. Quantfolio’s wealth platform helps firms navigate these challenges, enabling them to stand out in a competitive market whether the objective is to provide seamless omnichannel client journeys or increased sophistication in their offering whilst safeguarding compliance demands.