Survey of C-suite executives indicates need to make advisory models 'fit for future'
Wealth managers must get over their fears of switching gears if they’re to have any hope of future-proofing their business, suggests a new report by Accenture and Orbium, part of Accenture Wealth Management.
Drawing from a survey of 51 C-suite executives at leading private banking and wealth management firms in Europe and Asia, the report said nearly four in five (78%) don’t plan to make any significant changes to their traditional business models. That’s despite the fact that many executives at these firms understand the need for radical change to successfully address industry challenges.
On average, wealth managers polled expected to lose nearly one third (32%) of their own wealth assets under management because of intergenerational wealth transfers, which Accenture forecasts will amount to US$40 trillion of investable assets over the next 30 years.
To address this challenge, the report said large wealth managers need to serve multiple generations of investors who want tailored, digital services that align with their social and personal values, including ESG and impact investing. That would require firms to review inflexible business models and gaps in talents and capabilities so that they can better thrive in multi-firm ecosystems, platforms, and partnerships.
“Wealth managers must ensure that their advisory models are ‘fit for future,’ as the one-size-fits-all approach to client servicing no longer works,” said Ian Woodhouse, head of Strategy and Change at Orbium.
Woodhouse underscored how a younger generation of clients is demanding new products and ways to be served, which will require wealth managers to invest significantly in data and analytics technology that would pave the path for personalized advice delivered at scale.
Only 17% of wealth managers surveyed anticipated that the traditional client segmentation approach using factors such as age, region, and investable assets will still play an important role five years from now. The consensus view sees the market evolving toward a “segment of one” that reflects clients’ individual wants and needs, which 53% of respondents believe will be driven by traditional investment needs and evolving client choices.
“If wealth managers want to survive and thrive beyond these unprecedented times, they must focus on differentiation and innovation while maintaining their core mission of safeguarding clients’ assets,” said Michael Spellacy, a senior managing director at Accenture and global capital markets industry lead.
Talent is also likely to play a crucial role in shaping the industry’s future. A majority of respondents cited talent among their top three priorities for investment over the next five years. The big question, however, is whether they have the right cultures to attract and retain new talent, as 40% of survey participants said they have difficulty adopting a strong culture for change and embracing new ways of working.
