Wealth management firms in 2016 will put a lot of effort into responding to new investment advice standards for retirement accounts and to increasing pressure to adopt a digital model, according to Aite Group, which published its top 10 trends in financial services on Friday.
At the same time, the higher target range for the federal funds rate will provide much-needed revenue opportunities for wealth management firms and likely catalyzing interest rate reviews elsewhere.
Aite Group said that in considering the issues that would affect each of its research areas in 2016, its analysts had predicted what to watch out for, what actions to take and which technologies would gain traction over the next 12 months.
Following are Aite Group’s top 10 trends in wealth management for 2016:
1. Industry Continues to Reshape
As wealth managers reshuffle their global footprints, the effects of their strategic decisions will become apparent and investments in areas such as branding and marketing and more focus on new technology will deliver greater impact.
2. Incumbents Verticalize
Big wealth managers, brand-name asset managers and custodians will leverage their size and technologies to seize control of the wealth management value chain, especially in areas where margin pressure is greatest.
3. Technology’s Importance Will Not Wane
In 2016, wealth management firms’ continuing technology acquisitions will help them transform their business models and respond to retail clients’ needs.
4. Major Regulatory Change
Fiduciary rulemaking could force wealth management firms in the U.S. to put their digital investments on hold until they comply with new rules.
5. Traditionals’ Digital Advice Strategies
Incumbent wealth management firms globally will introduce new digital wealth management capabilities, not just pure robo-advice platforms.
6. Digital Advice Embraces Tradition …
In 2016, fewer digital advisor models will come to market as traditional firms enter the space. However, disruptive startups will likely surface in the active management, alternative investments and retirement spaces.
7. … and Globalizes
Digital wealth management will touch new geographies and expand in places where it has already been adopted.
8. Startups Drive Investing Innovation
The pace of retail investing, particularly for Gen Y, is now set by startups, no longer by incumbent online brokers.
9. Independents Get Tech
Regulatory demand, client expectations and better technology will pressure independent advisors to embrace technology.
10. Blockchain Disrupts
Nearly every transaction on an exchange, processed by a clearing firm or handled by a broker could be turned upside down by the blockchain, a decentralized network of transaction records.
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