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Pacific excluding Japan is expected to record the fastest growth in private wealth, with increased penetration of private wealth managers and riskier financial products gaining popularity.
The survey, which interviewed around 100 representatives of leading private wealth management firms, revealed that despite the near-term challenges of inflation and the uncertain outcome of the Russia-Ukraine war, global wealth is set to record consistent growth.
Pacific excluding Japan is expected to record the fastest growth in private wealth, with increased penetration of private wealth managers and riskier financial products gaining popularity.
Respondents said that market consolidation through M&A offers the opportunity to diversify their offerings to new markets or add newer technology-driven services to their product portfolios. While North America leads the trend, Europe and Asia are also adopting it either through pure M&A or partnerships.
Survey: Young investors making more ethical and diverse investments
The growing number of younger and female private wealth clients with higher risk appetite has emphasised the need for private wealth managers to combine technology and specialised advisory, according to Acuity.
“Younger clients with higher risk appetite prefer to have a mix of high-quality tools/dashboards for monitoring their routine investments and specialised advisory on niche areas such as alternative investments,” the report read.
Respondents also highlighted an increase in demand for wealth-preservation strategies for future generations following the pandemic, as well as ESG-focused investment advice.
“To cope with the changing private wealth landscape, wealth managers must rethink their client offerings”, said Chanakya Dissanayake, managing director, global head of investment research at Acuity Knowledge Partners.
“Our annual survey notes that firms expect an increase in demand for premium services, expansion to emerging markets and personalisation of offerings combined with technology. While these are key cost drivers, improving investment manager productivity and leveraging outsourcing are cost-effective means to drive profitable growth and gain a competitive edge.”
Russell Investments survey: Asset managers scale engagement with underlying investments
Dissanayake added that the survey’s findings show the various challenges wealth managers face, from margin pressure and ensuring regulatory compliance to operational challenges.
“Wealth management firms should be flexible and embrace technological innovation and changes in demands to sustain and grow their client base,” he said.
When it comes to potential threats in sustaining client markets, the emergence of new platforms targeting younger HNW clients was seen as the biggest threat with 32% of the responses.
This was followed by next-generation clients, categorised as those of 25-50 years of age, self-managing routine investments and using premium advisory services only for specialised and complex investment products.
Other concerns included a lack of diversity in offerings (26%), the increasing cost of advisory services (24%) and the inability to provide clients with a continuous value added service (23%).
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