Liz Field: Wealth managers have big opportunities ahead

As the much-discussed intergenerational wealth transfer accelerates, a new report from Accenture, with contributions from Pimfa as the professional association for wealth management, highlights growing opportunities for wealth managers in Europe mainland, the United Kingdom and Switzerland.

It also addresses the challenges ahead of increasing consolidation, talent acquisition and the need to appeal to a larger and more diverse market.

This report, ‘Investments and wealth advice: capturing the next wave of growth’, comes on the heels of Pimfa’s own research paper written by its Under 40 Steering Committee on how environmental, social and governance (ESG) initiatives can be leveraged to attract more investors from a grassroots wider demographic in the world of savings and investments.

Wealth Manager Trends

Accenture’s report reveals four trends that respondents believe are set to reshape wealth management in Europe and influence new business models by 2025. Mergers and Acquisitions.

Nine out of 10 respondents (91%) expect greater industry consolidation in Europe.

This would happen as companies target new business models, wealth segments or geographic markets and as other financial services companies like asset managers, insurers, fintechs and private equity develop their own wealth management or hybrid models.

The report suggests that mergers and acquisitions can help companies increase their scale as well as new investment services that could attract clients wanting broader, more holistic financial planning advice.

Youth Advisors

To address this, our industry faces a growing shortage of talent and skills in financial and investment advice. As more financial advisors approach retirement, seven in 10 executives (70%) believe that a lack of advisor talent and skills could have a significant impact on the industry.

Young advisors have the skills and knowledge the industry needs, including in areas such as ESG and digital assets.

But they want to work in companies that have vibrant cultures, with resonant corporate values ​​and purpose. These professionals may choose to become independent financial advisors if established wealth management companies do not change course.

We have all seen how the Covid pandemic heralded a period of massive and sustained growth in the use of technology. But, when asked to rate their own level of maturity in adopting and leveraging digital technologies, companies recognized that they needed to better design their target digital operations to meet customer expectations when interactions or moments of truth in vital engagements.

Suggested improvements here include better onboarding, scaling advice delivery, understanding customer channel preferences, and nudging customers against gaps and opportunities. These are key areas of interaction and experience that many respondents have yet to address, underscoring the need to accelerate and intensify digitalization across the industry.

Opportunities for wealthy investors

The report also highlights the need for greater organizational agility.

More than nine in 10 respondents (92%) believe greater agility will be key to driving future growth, forcing companies to respond to increased customer focus on ESG, improve customer experience through better CRM functions, deploying innovative investment and advisory solutions, and realizing hybrid advisory models to tap into underserved markets.

Accenture estimates that affluent European investors, ie those with total assets between 100,000 and 1 million euros, hold more than 23 billion euros in personal wealth.

This is about 25% more than the €19 trillion in total investable assets of the high net worth and ultra-high net worth markets in onshore Europe combined.

If companies can attract excess liquidity from onshore investors, which the report estimates at 14 billion euros, then this represents a significant and lucrative opportunity for wealth managers.

As wealth shifts to younger investors and women, understanding ESG motivations will be key to attracting these groups. In addition, the current market volatility, coupled with rising cost of living levels in the UK and across Europe, creates an urgent need to provide advisory services to a wider range of investors. to help create a stronger culture of savings and investment. .

Liz Field is CEO of the Personal Investment Management & Financial Advice Association

Dolores W. Simon