EY Global Wealth & Asset Management has published a white paper highlighting the top 10 drivers impacting global wealth and asset management. Those drivers, listed below, will be disruptive and bring change – they represent threats to the status quo, but savvy firms can capitalize by viewing these disruptions as opportunities to differentiate themselves from the competition by providing superior service to their customers.
Financial technology (“FinTech”) threatens the future of financial advice. In EY’s view, firms must quickly react to regulators and investors, who are demanding more transparency, better risk management, and greater clarity in the connection between fees paid and services delivered. Otherwise, investors will look to automated services to save money.
It’s not only customers that firms have to please, but also regulators. While failing to deliver adequate services for the fees charged runs the risk of losing customers in a direct fashion, even firms that satisfy their customers have to consider regulators, who are increasingly scrutinizing the value proposition offered by firms.
Long-Term vs. Short-Term
It has become increasingly clear to investors (and regulators) that some firms sacrifice long-term sustainability in pursuit of short-term earnings targets. In EY’s view, the firms that more adequately balance long-term conviction vs. short-term action will be the most successful.
According to EY, “misalignment of liquidity” was one of the key causes of the financial crisis, and with interest rates so low today, any hiccup in asset allocation could leave investors susceptible to liquidity shocks. This is an obvious threat to the status quo, but adaptive firms could excel in this area as a means of differentiating themselves from their competitors.
Focus on Client Experience
According to EY, firms need to move away from “pushing products” and toward building their business model based on customer experience. This is inherent in several of the other key drivers.
Investments with Purpose
Investors are increasingly looking for more than just monetary returns for their investments. This is particularly true with the growing influence of millennials and women in the investing community. These investors often demand that their investment opportunities align with their social values, and the firms that can accommodate these demands stand to gain business.
Other drivers listed in the report include:
- Cybersecurity, with cyber-threats as strong as ever;
- Simplifying the proposition, with simple, clear, and transparent the new mantra;
- Technology and strategic efficiency; and
- The complexity of global tax reporting.
In conclusion, EY asserts that “thoughtful planning, coordination with all stakeholders, and long-term strategic insight” will be the essential elements for successful wealth and asset management. Firms that adapt opportunistically to find new ways to increase productivity, enhance client experience, and deliver more value in their offerings will emerge as the “winners in the changing market.”
For more information, download a pdf copy of the report.
Jason Seagraves contributed to this article.