Digitalization and ESG at the heart of the concerns of wealth managers in 2022
Australian wealth and asset managers have proven largely resilient throughout the COVID-19 pandemic, but it has certainly accelerated the relentless digitalization of all aspects of their business, said Rita Da Silva, Head of wealth and asset management from EY Oceania.
“In 2022, as front and back office functions move towards more automated process models to help manage costs and increase efficiency, the industry will also need to focus on digitally improving its customer engagement, lifecycle models and delivery channels,” said Da Silva. noted.
According to her, the coming years will see all client groups increase their demand for tailored investment solutions, advice and education, personalized real-time service and the integration of non-financial goals.
“Balancing these demands remains a challenging prospect for the sector,” Ms. Da Silva noted.
Also in 2022, she expects institutional clients to continue to reduce their number of relationships with asset managers, putting smaller businesses under pressure.
In this environment, she said, any manager who fails to create value will lose mandates, with many investors demanding solutions that preserve capital while delivering high returns.
“Asset managers will need to tailor proposals, models and teams to client needs to retain their business.
“In the superannuation space, we’re likely to see super funds selectively insourcing parts of their portfolio management, as well as seeking high-yield proprietary opportunities in areas such as private debt,” Ms Da said. Silva.
“We can also expect further consolidation in the pensions industry as funds come under continued pressure to account for their performance and member returns. Fund consolidation will push asset managers to form fewer relationships , but stronger,” she added.
The focus on corporate social responsibility and sustainable investing is also set to accelerate in 2022 and beyond.
“Institutions will seek to balance their ESG commitments with their fiduciary responsibilities. At the same time, demand for alternatives and digital asset products and strategies will also accelerate.
“Sustainable success of the wealth and asset management industry in 2022 and beyond will require delivering: client value and trust; social value by integrating ESG into the business model; inclusive and equality-driven culture; and financial strength and resilience, driven by technology-enabled models that will generate higher growth at lower cost,” Ms. Da Silva concluded.
Maja Garaca Djurdjevic
Maja’s career in journalism spans more than a decade in finance, business and politics. Now a writer and journalist with experience in all elements of the financial services industry, before joining Momentum Media, Maja reported for several established media outlets in South East Europe, examining key processes in post-conflict societies.