PwC's recent Global Asset and Wealth Management Survey shines a light on the incredible opportunities for Asset and Wealth Managers to embrace change and thrive. This is necessary for survival, as 16% of the companies are at risk of disappearing in the next 4 to 5 years as part of an ongoing consolidation phase. Factors like digital transformation, evolving investor expectations, and industry consolidation are propelling this trend. To flourish, industry leaders are focusing on meeting dynamic investor needs, harnessing the power of disruptive technologies, and showcasing unique selling propositions, as brilliantly demonstrated by Digipal's AI-driven solutions.
As per PwC's recent Global Asset and Wealth Management Survey, unveiled this Summer, a resounding message rings clear for Asset and Wealth Managers: the changing landscape is a realm of possibilities, not just obstacles.
The survey paints a portrait in which up to 16% of global asset and wealth management (AWM) companies, or one in six, are projected to disappear within the next 4 to 5 years. This development can be counteracted by the industry's adaptability to various challenges like digital transformation, the evolution of investor expectations, consolidation, and the pivot towards more retail-oriented approaches.
In light of these promising opportunities, industry leaders are gearing up to not just adapt, but to excel amidst these transformative winds. What are the essential guiding principles for these leaders to sail ahead into this sea of change? Let's delve into some insights that will help them, especially smaller and medium industry players, rise above the upcoming shifts.
High-net-worth (HNW) individuals are actively seeking to amplify the value they gain from their wealth managers and are open to switching firms if their evolving needs aren't fully met. Many are reevaluating their wealth management partnerships with the aim of accessing an expanded range of products and services, including comprehensive after-sales support.
This remarkable opening with HNW individuals is catalyzed by the generational shift of wealth as millennials start inheriting the wealth amassed by their baby boomer parents. A staggering sum exceeding US$68 trillion is poised to transfer from baby boomers to millennials by 2030. This phenomenon will undoubtedly amplify the demand for technology-infused services.
Though challenges do arise, many AWM organizations are boldly stepping up to offer these sought-after offerings. Even as they encounter operational intricacies compounded by financial advisors' reservations, their determination remains unshaken.
In the midst of these dynamics, it's heartening to learn that almost 90% of institutional investors hold strong convictions about the transformative potential of disruptive technologies like AI and LLM to yield superior outcomes and returns within their portfolios. It's indeed inspiring that asset managers continue to navigate the path towards meeting these elevated investor expectations, further fueling their journey.
With the momentum of industry consolidation building up, predictions point towards the top ten asset managers taking charge of approximately half of the global mutual fund assets by 2027. The prominence of these major players is set to intensify the encouragement for smaller and middle sized entities to quickly identify and amplify their unique selling propositions (USPs) or risk disappearing. Industry players, and especially the smaller and middle sized ones, might not possess the capacity and expertise to effectively compete across all markets while offering the complete spectrum of services desired by the increasingly discerning clientele.
In this landscape, focusing on strengths and leveraging scale, talent, and technology takes center stage in driving efficiency and profitability through the delivery of their USP. Concurrently, streamlining aspects that aren't optimal in their product and service lineup emerges as a prudent strategy. For challenges that surpass their capabilities, seeking external expertise becomes a natural choice. Tackling the intricacies and reporting necessities of investments might call for outsourcing to partners with the requisite resources, ensuring state-of-the-art tech platforms and skilled personnel.
By deeply understanding investors, honing robust data analytics, and possibly partnering with third-party distributors, AWMs can provide exceptional insights and value. Streamlining suboptimal operations translates to streamlined complexity and cost reduction. For instance, does an AWM truly need an entire in-house investment writing team or legal department, or could the strategically sound choice be to profit as much as possible from today's technological developments and outsource some of these operations while concentrating on company-specific aspects?
The AWM industry is in a perpetual state of adaptation, catering to shifting investor desires and market dynamics, while concurrently catering to the shift towards personalized, digitally-oriented solutions. Firms that adeptly leverage technology, forge strong connections, communicate meaningfully with both new and existing customers, and deliver extraordinary customer experiences are primed to blossom within this rapidly evolving terrain.
At Digipal, this is the very essence of our mission. Through our Digipal AI, we empower AWMs to seamlessly cater to the demands of today's customers, enabling them to adapt and thrive for the long haul, all efficiently and at a grand scale.
Has the above article sparked your interest in the Digipal solution? Contact us and together we will determine how we can best support you.