With everything going on — the COVID-19 pandemic, working from home with children and pets, and global economic uncertainty — it can be a struggle for advisors to maintain and grow their businesses. As Capgemini acknowledges in its recently released World Wealth Report 2020, advisory firms have been “tossed” into “unchartered waters” this year.
But after reading the report and listening to the related virtual discussion on the state of the wealth management industry, which I had the honor to help create, I am at the same time optimistic for advisory firms.
Amid the global uncertainty, there are three trends that advisors need to focus now to not just maintain, but also grow their businesses in the months and years to come:
One of the key takeaways from the Capgemini report is that high-net-worth individuals (HNWIs) want more from their advisory firms in return for the fees that they pay.
Around one-third of the HNWIs surveyed for it said they were “uncomfortable” with the fees they paid in 2019, and that was for the fees they paid before the pandemic. The report surmises that 2020’s economic volatility may put “enormous pressure” on advisory fees “as gaps between HNWI expectations and reality widen.”
This means that advisors can’t rest on the laurels of investment performance to justify their fees. However, there’s a bright spot.
Advisory firms can provide technology-driven, hyper-personalized advice and reports to address HNWIs’ expectations and lock in future growth, according to the report. And, best of all, these tools for hyper-personalization already exist — which brings me to the next trend.
2. The Blending of Technology and Human Advice
The growth of robo-advising may have given technology a bit of a bad rap in the traditional advisory space. However, the hyper-personalization that I described above requires that firms embrace new technologies, not shy away from them.
Artificial intelligence (AI) and analytics can help firms create, for example, more tailored risk profiles, personalized portfolio construction and advice, and customized client reports, according to Capgemini.
And that’s not all. Advisors’ work processes benefit from these technologies as well.