Wealth Management: Emerging trends for 2020 and beyond

The wealth management industry is still in the early stages of digital transformation, but with increasing urgency, wealth managers are rethinking the strategies and business models that define their business.

Rapid advances in technology and ever-greater moves towards digitalization in the industry are forcing wealth managers to rethink their business, technology, and client engagement strategies. Furthermore, more than a decade after the global financial crisis, the wealth management industry continues to feel the impact of a tightening regulatory environment that periodically requires wealth managers to modify their business models in order to remain compliant.

Against this dynamic backdrop, data is increasingly moving front and center, becoming the lifeblood of wealth managers who must form a holistic picture of market risks and opportunities at speed if they are to remain competitive.

With some industry observers speculating that the end of a record length bull run might be near, wealth management firms that have not yet repositioned their business models and technology architecture should urgently future-proof their businesses before potentially challenging economic pressures become a reality.

Refinitiv serves over 40,000 institutions in approximately 190 countries providing data and insights to global financial markets commissioned global research firm Aite Group for a research of latest trends in wealth management.  Christopher Sparke Global Head of Front Office and Digital, Wealth Management at Refinitiv observed, “Since the global financial crisis of 2008, we have learned a host of valuable lessons and continue to ride the longest bull market in history, but now the industry must look to the challenges and opportunities that lie ahead. As we move into a new decade, our industry finds itself poised to surge forward into a complex digital landscape.

The rapid advancements in technology and digitalization, many of which are targeted directly to consumers calling for shorter innovation cycles, are forcing firms to rethink their business, technology, and client engagement models. The shifting regulations around the globe continue to change the playing field for wealth management firms, a process that is far from over and requires firms to modify their business models. Indeed, data is increasingly becoming the lifeblood of wealth management firms.  While data used to be a byproduct of conducting business, it is now moving to center stage. Those firms that take their data seriously and harness its power will be more successful, agile, compliant, and in a good position to best serve their clients.

Key findings

A survey done by REFINITIV “The transformation of Wealth Management” finds the clock is ticking for wealth management firms to adjust their businesses to these industry trends. While over 70 per cent of the firms surveyed in the report say organic growth is a high priority, over 25 per cent state inorganic as the primary source of growth over the next 5 years.

Survey found that 100 per cent of respondents consider wealth transfer to be one of their top 3 concerns and are therefore starting to tailor their offerings to the next generation. As many as 90 per cent of wealth management firms have recently reviewed or revised their client segmentation models in line with the belief that a tailored and customized approach.

The wealth management industry is still in the early stages of digital transformation, with 46 per cent of respondents only partly satisfied or not at all satisfied with their current digital offerings. About 86 per cent of wealth management firms consider servicing clients as a highly important digital capability to acquire. About 65 per cent of respondents view operational scale as ‘very important’, pointing to a clear appreciation of the fact that future profitability depends on fewer financial advisors serving more clients, more efficiently.

Data and analytics are quickly becoming the key differentiators for wealth managers, enabling them to serve clients more holistically, with 61 per cent of respondents viewing analytics and creating insights as “very important”, and 39 per cent as “important”, for their firms over the next 12-18 months. About 80 per cent of respondents reported an increase in spending related to “change the bank” over the past few years.

5 trends

The latest research has revealed five key trends that will shape the industry over the next few years, and wealth managers should take heed of these as they strive to position themselves as profitable, client-centric, agile, and compliant industry players.


Customization has set in the concept of one-size fits all is ending fast. The 100 per cent of firms focus on supporting their advisors in the context of wealth transfer. Therefore, it comes as little surprise that firms are starting to tailor their offerings to the next generation. In fact, firms that have invested in digital self-service platforms frequently treat next generation clients as a distinct persona, pointing to the fact that digitalization is already offering concrete help in creating and understanding client personas more effectively.

Other key focus areas include the development of model marketplaces (92 per cent) and assessing the impact of behavioral economics on investment outcomes (86 per cent). While environmental, social and governance (ESG) based investing is not yet amongst the top reported focus areas, many wealth managers are developing their offering in this area in anticipation of it becoming a major tool for advisors to meet the needs of clients who increasingly favor sustainable investments and green portfolios.

As many as 90 per cent of interviewed wealth management firms have recently or are currently reviewing and revising their segmentation models. A clear appreciation of the need to tailor and customize portfolios has seen many firms starting to develop strategies for targeting specific client segments and offering fully customized offerings to meet the needs of those segments.

In line with this, almost all (90 per cent) interviewed wealth management firms have recently or are currently reviewing and revising their segmentation models. Current models are largely based on assets under management (AuM) — with an element of recognition of a client’s life stages — but existing segmentation models typically lack taking behavioral differences between clients into account and as such don’t provide much foundation for differentiated client engagement.

While aiming for mass customization would suggest that firms would have to expand their product lines to meet the needs of a diverse client base, but firms are actually narrowing their traditional product shelves and emphasizing firm-defined model portfolios that are tailored to the client’s risk profile and shift more focus onto relationship building.

They do so by offering their clients investment clubs, financing, trusts and estates, concierge services, and other tailored specialized advice covering art collections and sports teams. They are also expanding product offerings in certain areas, such as adding high quality alternative investments (for example, hedge funds, liquid alternatives, or private equity funds) through due diligence processes that are thoroughly vetted by the firm.


More and more firms are acutely aware of the importance of acquiring digital capabilities and are taking action. Most wealth management companies are planning to incorporate digital capabilities in one form or another into their service models. Time is nor far when the industry will ultimately move towards hybrid client engagement.

A significant 86 per cent of respondents in the survey ranked servicing clients (including managing daily tasks, account opening, and onboarding) as a highly important digital capability, followed by 69 per cent who view the provision of information (for example, statements and performance reports) as ‘highly important’.

Operational efficiency

The research further reveals that 65 per cent of respondents rate operational scale as a ‘very important’ focus area over the next 12-18 months — but while they strive to improve their ability to scale operations through creating efficient workflows and automation, many are battling a fragmented back office infrastructure, often complicated by multiple product silos and legacy systems.

In pursuit of operational efficiency, over 60 per cent of the firms surveyed are willing to leverage outsourcing propositions to enhance lacking capabilities, scale, or in-house resources.  Some larger firms have created venture arms that allow them to keep track of innovative startups, invest in them, and take advantage of newly created solutions.

Focus areas

Improving operational efficiency is, of course, only possible if technological change is accompanied by advisor education. Rapidly evolving business models, product lineups, digital engagement platforms and regulations are also necessitating advisors being continuously kept up to date. Advisor education is therefore, a central element of efficiency change, with training increasingly being delivered digitally. But it is not only the advisor force that has to be trained — wealth management firms have an increasing need to educate their clients as product and service offerings change and digital capabilities evolve.

Data & analytics

Data and analytics are quickly becoming key differentiators for wealth management firms, enabling them to serve clients more holistically and generate relevant, timely, and actionable insights for clients and advisors alike. When asked to rate the level importance of different topics over the next 12-18 months, a significant 61 per cent of respondents rated analytics and creating insights for clients as ‘very important’.

Although over 60 per cent of firms are developing advisor analytics capabilities, the truth is that many firms are focused on building their advisor and client analytics but vary in their stage of development and where the data resides. Most firms are still building out their databases and working to make their data cleaner and with the right level of depth before they feel confident enough to apply analytics.

There is a clear need for a client-centric data infrastructure that connects the front and back offices seamlessly, and that can consolidate multiple product silos and legacy systems. Infrastructure such as this would deliver a significant opportunity for consolidated data to be harnessed to power persona based segmentation models and help create a truly personalized approach to client relationships.

Regulations and digitalization are reshaping wealth management business models and the result is that financial advisors are becoming fewer products focused and more relationship orientated. As the wealth industry continues to shift away from products and towards services, the role of financial planning is taking center stage in the client and advisor relationship. Consequently, building and attracting the right advisor skillset will become increasingly important for success.

Access to increasingly streamlined financial planning tools and their integration into the overall advisor workflow will allow for broad adoption and wider availability of planning across wealth tiers. Related to this, regulations and digitalization have also led to advisor compensation becoming a substantial topic of discussion in the industry.

Looking ahead

The public needs are constantly evolving and given this dynamic environment and the many challenges facing wealth managers, firms need to develop a clearly defined strategy, supported by reliable and holistic data and the right tools to help them thrive in a changing market.

With the right mix of reliable content, leading-edge technology and trusted human expertise, wealth managers will be able to evolve in line with industry trends, remain compliant with tightening regulations and harness the power of digitalization to accelerate growth into the next decade and beyond. The big data powered e-commerce players such as Amazon provide ample evidence that tomorrow’s industry leaders will be those firms that are able to master the data and analytics challenge.