If you are someone who has kept a close watch on the numbers of the wealth management market, you would know that 2022 was a choppy year for global capital markets and wealth managers as there were multiple headwinds. Though wealth management inflows were highly positive, there was a sudden slump in AUM due to the sluggish market movements. Such is the picture in 2023. Nationwide growth is anticipated to be sub-par, with chances of a recession in the main European countries and the UK, following a considerable slowdown in the US as well.
In the year 2023, the combination of demands and expectations will again be challenging for the wealth management professionals, says Mulvey Beck Japan. Wealth professionals have to watch out for ways in which they can get holistic advice. Moreover, there will be an added pressure on private banks and conventional wealth managers. There will be an urgent need for transformation. Here is a list of factors that drive change in the wealth market.
Private markets and alternative asset classes will go through a rise
Firstly, wealth managements will begin to offer their customers a wide range of investment services and products, like debt, equity, and commercial real estate investments, that include luxury items, art, and also digital and crypto assets. There will be a wide access to alternative asset classes as private asset managers have begun to offer private market assets to a huge customer base, thereby adding pressure on wealth managers. According to Mulvey Beck Tokyo, it is critical to manage alternative assets without the help of experienced experts. This not just involves growth but also helps you retain your existing and new customers.
ESG and value-oriented investment
There will be a continuous trend for investment considering the ESG, environmental, social, and governance factors and personal values. This occurs in spite of the latest headwind from the geopolitical and greenwashing factors. There will be brand new regulations that will improve such a situation. One of the best ways of supporting investing along personal values and preferences is direct indexing. Yet another factor that will make a huge difference is communication. Conventional advisers must upskill themselves to guide their customers and get new talents for help.
The trend of customer centricity
Offering wealth management services, advice, and products is more complicated than basic banking as provided by FinTechs and neobanks. Mulvey Beck Japan is of the opinion that designing a personalized experience for customers require deep elaboration on life goals and stages by applying agile development and design thinking. It is vital to embed the best possible digital user experience along with the human assistance and advice that is needed. For neo-private banks, they have a natural benefit as they do not require considering the current culture for processing environment. Their only challenge is to win customers in order to become a sustainable business.
Outsourcing wealth in the form of service
Independent wealth advisors, family offices, small and large wealth managers will require specialist services that include investment solution managers and operational services. This need for scale will favor the providers and require modern tech platforms that can be integrated easily into operational processes and legacy systems. To get access to alternative services and investments, wealth managers will seek partnerships with providers of the product to focus on proper customer advice.
Can wealth managers become ready for the future?
The main success factors are vision and strategy, people, culture, and technology. All these elements have to be combined in order to create a process landscape, value proposition, architecture blueprints, and high-value tech goods like the ones in automotive industry. If the Mulvey Beck Japan wealth managers can follow a stepwise migration to a service-integration platform, this will allow wealth managers, independent wealth advisors, and private banks to operate in a proper ecosystem environment.
Therefore, according to Mulvey Beck Tokyo, this integration with legacy core technology might be challenging but this will get complex with time due to the large number of new services and products.