KPMG’s 80-page report, Investing in the future: How megatrends are reshaping the future of the investment management industry
, covers a lot of ground in its attempt to understand investment advice and how it will change over the next 15 years.
“In an industry currently suffering from high levels of consumer mistrust, investors are likely to assign increased value to trusted brands, particularly as awareness of issues such as data security, confidentiality and privacy increases,” states the KPMG report. “In tomorrow’s world, simplicity, transparency, honesty and integrity are likely to be regarded as more important buying criteria.”
The typical investor in 2030 will likely be nothing like the investor of today. Clients will be far more spread out geographically due to technology advances. Their social, political and economic attitudes will also be different.
Unfortunately, their financial literacy will remain low suggesting advisors will need to continue providing information and education to clients in order to help them better manage their finances.
In addition, it’s expected that clients will have an increasing number of life events that will require advisors to be very adept at making changes to their client’s investment portfolios in an effort to accommodate these needs.
“It is clear that retirement systems are under intense pressure. It is also clear that while investment performance is likely to continue to be important for many, outcome certainty is an increasingly important criteria driving savings and investment decisions,” KPMG writes. “Demand for this is also likely to heighten as an increasing number of individuals realize, possibly through experiential learning gained from observing the struggles of their parents, that they need to take greater responsibility for their future retirement.”
While the megatrends of demographics, technology, the environment, and social values will be the biggest drivers of change in the future, ultimately, an advisor’s ability to meet the needs of clients is what matters most.
“We believe investor engagement will have to increase, simply because falling state provision, issues around corporate pensions and the prospect of reduced inter-generational wealth transfer mean that they will have to take greater responsibility for their own retirement planning,” states KPMG. “No-one else will do it for them.”
In 2030, some things will look a lot different for financial advisors, while other things like good customer service and doing what’s in the best interests of the client will remain the same.