Navigating the future of Asset and Wealth Management
The asset and wealth management industry are in a constant state of evolution, and 2023 is no exception. Some of the key trends to watch for this year include:
Investor Communications: As investors, not least the new wave of younger investors who have grown up with such ease of information, look to become increasingly informed and engaged, they are demanding more transparent and regular communication from their asset managers. Expect to see an increased use of digital channels such as social media, email, and video conferencing to provide regular updates and insights to investors. This can allow firms to build trust and establish long-lasting relationships with their clients if executed correctly.
FCA's Consumer Duty: The FCA's Consumer Duty is due to be implemented by 30 April 2023. The aim of this new regulation is to ensure that firms put the interests of their clients at the heart of their business models. It is intended to enhance consumer protection by introducing clear expectations for firms to deliver good outcomes for their clients, taking into account their needs, preferences, and characteristics. Asset managers that are able to demonstrate a clear commitment to their clients' best interests and deliver good outcomes will be well-positioned to succeed in this new regulatory environment.
Sustainability and Regulation: Sustainability is becoming an increasingly important focus point in the asset and wealth management industry, driven in part by the European Union's Sustainable Finance Disclosure Regulation (SFDR). SFDR require firms to disclose their sustainability-related activities and the integration of sustainability risks in their investment decisions. This will lead to more investment options focused on sustainable and socially responsible investments, as well as increased pressure on asset managers to disclose their own ESG practices and performance.
Data Insights: With the increasing availability of big data and advanced analytics, firms can gain deeper insights into their clients' needs, preferences, and behaviours. However, many firms still use legacy systems to manage their data, which can limit their ability to gain insights from that data.
It's worth noting that while many firms may have legacy systems in place, they can still leverage their existing data as part of a larger technology transformation effort. This can involve integrating new technologies and platforms with legacy systems to extract valuable insights from that data, while also modernising their overall technology infrastructure. By doing so, firms can gain the benefits of advanced analytics and big data without having to completely overhaul their existing systems, and use those insights to make more informed decisions and improve client engagement.
Expect to see more firms leveraging modern technologies and platforms to gain better insights from their data, and using that data to improve their decision-making and client engagement.
Digital transformation and Digitisation: The shift towards digitisation in the asset and wealth management industry has been ongoing for some time, but it is expected to accelerate in 2023. This includes the use of robo-advisors and other digital tools to provide advice and manage investments, as well as the use of blockchain and other emerging technologies to improve efficiency and transparency. Additionally, firms are expected to digitise their processes and operations, such as automating paperwork and onboarding, to improve efficiency and reduce costs. The use of AI in this area is also becoming increasingly prevalent, as it can assist with tasks such as portfolio management, risk management, and predictive analytics.
Overall, the asset and wealth management industry is poised to see significant changes in 2023 as firms adapt to new trends, technologies, and regulations. Nevertheless, one thing is certain, the industry will continue to grow and evolve, providing investors with new and exciting opportunities to grow their wealth.