Poll finds tech top of mind among client-centric wealth managers

Survey of wealth management firms reveals trends and intentions around technology, new asset classes, and ESG

Poll finds tech top of mind among client-centric wealth managers

While the pandemic’s impact over the past year and a half has pushed technology to the top of the change agenda for most wealth managers around the world, that’s not the only area where transformative change is happening.

In a newly published white paper, investment consulting firm bfinance outlined the results of a survey of 120 wealth managers it conducted in June and July 2021. The respondents, who ran the gamut from small boutiques to large familiar names and family offices, represented more than US$1 trillion worth of client assets across Europe, North America, and the Asia-Pacific region.

Among the wealth managers bfinance surveyed, 87% said they introduced new technologies for their clients within the past three years, and 90% said they plan to do so in the next two. Many of the participants described shifts in social, mobile, analytics, and cloud technology – the so-called “SMAC stack” – with some going further with process innovation, such as leveraging AI in providing advisory services.

Firms are adopting technology to appeal to tech-savvy and information-hungry consumers, as well as drive greater efficiency through digitization and automation. But bfinance also warned that “firms must balance this need for efficiency against client appetite for a more bespoke approach.”

The report also noted that a 71% majority of wealth managers use illiquid investments, which bfinance defined as those with a redemption period that’s more than one year from the date of investment or outside the client’s control.

The majority of those adopting private-market strategies, it said, are motivated by a desire to improve diversification or capture illiquidity premia. Among those without private-market exposure, a quarter have plans to enter the space, while another third were interested but said “the obstacles are too significant”; a large 40% minority said they had no interest in diving into the private-markets space.

Seven tenths (69%) of wealth managers said they’ve added new asset classes of investment strategies for their wealth clients during the past three years, while half (52%) expressed plans to add at least one new asset class or investment strategy in the next two years. Passive strategies appear to be on the decline, as only 21% of managers plan to increase their exposure and 11% expect to cut in the next two years.

And while the mainstreaming of ESG is well and truly underway, bfinance found only 33% of wealth manager respondents had all or the majority of client assets being managed with an ESG-focused approach.

Encouragingly, 55% of wealth managers surveyed said they intend to integrate ESG/sustainability factors across the full spectrum of their investment activities. One third said they’re looking to adopt specific discrete ESG or sustainable funds for interested clients, while 10% had no strategic intention to offer ESG or sustainable investment options.


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