Looking forward 10 years, the wealth management landscape will shift dramatically. At our recent Financial Services 2030 conference, expert speakers highlighted major changes in the industry over the next decade. Two of the most significant shifts are client demographics and the emergence of new competition for wealth advice.
From a demographic perspective, women, millennials and new Canadians will make up a significant percentage of the wealth market. It is estimated that by 2030, women will control 65% of the nation’s wealth. Millennials will control four times the wealth that they do today. And, between now and 2030, approximately 80% of Canada’s population growth will come from immigration, with a large percentage coming from Asia – a highly educated and entrepreneurial population. These demographic changes will dramatically alter the wealth market.
Catering to an increasingly diverse clientele will require the advisor to leverage technology to provide highly personalized advice. Millennials expect a frictionless technology-enabled experience that caters to their desire to focus on themselves, their lifestyle and finding a purpose for their lives. Women expect financial advice that is based on a life map and goals, as opposed to promoting product features, which is more common in the current advice model focused on male preferences. Working with new Canadians will require the advisor to understand broad cultural differences, beginning with language and a sensitivity to different approaches to savings, financial planning and risk.
Technology that supports personalized messaging, advice and automation through the prospecting, onboarding and client management phases will be critical to success. Digital marketing platforms that support personalized and customized content and messaging will facilitate prospecting to a more diverse prospect base. Automated onboarding, AI-powered portfolio development and advanced digital client reporting experiences will be table stakes in this new wealth marketplace.
We know that competitors will continue to strengthen in the next decade. Big tech players such as Facebook, Amazon and Google are developing a wide range of financial services products, including wealth management. Millennials have grown up trusting these tech players, who will leverage this trust to expand their financial services products to a captive audience. Fintech will continue to mature, and consolidation in this market is expected. New competitors will emerge such as Ant Financial, which has grown to be the largest fintech in only five years by focusing on marketing to the Asian diaspora. Experts such as Gartner are predicting that these competitors will drive 80% of the heritage financial services firms out of business, or relegate them to commoditized players.
While this shifting landscape might seem ominous, most experts predict that wealth management will evolve to a hybrid advice model that equally values technology and human advice. Deloitte predicts that “clients will expect unique, tailor-made services suitable to their individual needs. They value modern, intuitive financial management platforms, available at any time via a phone or a tablet, but they still care for an experienced professional who will translate and explain the strategies proposed by the systems and help in making the decision. They are willing to pay a premium for such a combination of intuitive tools with an experienced personal advisor.”
Advisors who aggressively integrate technology into their practices while focusing on developing their skills to cater to this shifting wealth landscape will continue to prosper.
You can find additional content on Wealth Management in 2030 here.