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Wealth and Asset Management Trends to Watch

Look at almost any publication on wealth and asset management current trends and you’ll notice some common themes. Not surprisingly, these concerns are also often ones we find ourselves helping our clients address by identifying practical and implementable solutions. Four key themes:

1)     ESG – for both asset and wealth managers, this is a top concern with many implications for how business is conducted and how money is managed. Clients increasingly want to know what the company’s values are, how it interacts with the community, shows regard for its employees, and promotes social change within the company, including diversity, sustainable practices, and supplier or vendor relationships. For investment management, it is important to have a viewpoint on ESG and an explanation of how this impacts portfolios, whether you use an overlay, it’s an integral part of the investment management process, or customized based on an investor’s values and beliefs.

2)     Technology – the winners last year were those who embraced technology solutions along the entire customer journey. From stepping up communications to enabling both staff and clients to conduct business safely and effectively, firms were able to operate in an almost seamless, “business” as usual manner. While the personal and in-person is always valuable, most companies found that a mixed approach provided an enhanced experience, a trend that is likely to outlast the current environment.

3)     Scale – we continue to see industry consolidation as firms seek to operate more efficiently and build the resources necessary to survive during uncertain periods. PwC estimates that over the next five years, “mega-firms will consolidate further and control some 68% of AUM” versus 53% in 2019. This is an indicator that the M&A market will remain very active for the foreseeable future.

4)     New administration – most firms are trying to assess and prepare for changes that the new administration has proposed or may take that will affect wealth and asset management. In particular, changes in individual and/or corporate tax rates and tax policy could influence how businesses are run, as well as estate planning and investment management for wealthy individuals and families. Interest rates and inflation are also an area of focus, as the search for yield continues balanced by the impact that increasing rates will have on securities’ prices.