Investors see a future in which their financial advisors are more digitally-savvy and available on a “24/7” basis while the investment industry, as a whole, focuses on increasing its technology offerings, according to a new global report from Roubini ThoughtLab released on Wednesday.
The report, Wealth and Asset Management 2021, looks to paint a picture of what the wealth-management industry will look like in five years, stemming from the results of a survey in which 2,000 investors and 500 investment providers across 10 major markets, including Canada, were polled.
The report indicates that thanks to changing demographics and increased use of technology, client expectations will change dramatically over the next five years. Specifically, the top three expectations among investors surveyed from their advisors are: greater access on a “24/7” basis (51%); more advice that delivers high investment returns (40%); and a greater level of digital proficiency among their advisors (37%). A desire for lower fees comes in last place with 35% of investors.
In addition, 72% of investors surveyed want more customized solutions from their wealth providers by 2021. Investors are also looking for access to a wider selection of investment options (64%), greater cybersecurity (63%) and the use of the latest technology (62%).
Increased digital capabilities are a major focus for the investment providers surveyed, with 59% saying the top priority is the development of financial technology (fintech) capabilities.
“The research also shows that financial technology will disrupt the industry from within,” the report states. “Unlike other industries, such as retail, which experienced external disruption from digital startups such as Amazon and eBay, fintech solutions will become widely adopted by incumbents with trusted brands.”
That adoption of fintech tools among traditional wealth providers will suit a significant many investors surveyed, as 45% state that fintech solutions can be very valuable when used with traditional investment services, and 37% say they will only work with a fintech provider that’s associated with a trusted brand.
Other technological priorities for investment providers include the development of “anytime, anywhere, any device” access (55%); omni-channel customer experiences (48%); technology-enabled planning tools (45%); and improving performance analytics (41%).
Other areas that investment providers will want to focus on within the next five years include virtual reality and artificial intelligence, which are both set for massive adoption growth rates of more than 100%. Adopting these types of technologies that will set wealth-management providers apart from their competitors, according to the report.
The report also analyzed the level of global wealth that will be present by 2021. Household assets will increase by $89 trillion in the 25 top markets — and this jump in assets should lead to more than $50 trillion in investment into the financial services sector.
The individuals who will see increased levels of wealth include millennials, those belonging to Generation X, women and emerging-market investors. Even those with little savings will invest more thanks to greater access to the market through technology, the study predicts.
The report is based on the thoughts of 2,000 investors from 10 markets, including Canada, the U.S., the U.K., Germany, Australia, China, Hong Kong, Mexico, Switzerland and Japan. A survey of 500 investment providers from those regions was also conducted. Investment providers, for the purpose of this report, refer to full-service banks, mutual fund companies, private banks, family wealth offices, investment advisors and alternative investment firms. Advisory meetings and interview were also held with 40 industry leaders and experts.
Roubini ThoughtLab conducted the research in conjunction with Toronto-based Bank of Montreal; Lake Success, N.Y-based Broadridge Financial Solutions Inc.; New York City-based CFA Institute; San Jose, Calif.-based Cisco Systems Inc.; Limassol, Cyprus-based eToro (Europe) Ltd.; London, U.K.-based Schroder Investment Management Ltd.; Oaks, Pa.-based SEI Investments Co.; and Boston-based State Street Corp.
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