8 Trends That Will Reshape Wealth Management in 2023

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1. Family-office-like services will be needed for all clients, not just the ultra-wealthy.

After a highly volatile year, followed by one with the threat of recession looming, financial advisors are likely to find it difficult to differentiate themselves on the basis of investment returns. Still, advisors can chart a course for growth for their business by embracing the shift to becoming a truly holistic advisor. That means delivering for every client the type of service that the ultra-high-net-worth can expect from their family offices.

This approach requires advisors to oversee not only their clients’ investment portfolios, but also, with the help of other professionals, their accounting and estate planning needs, as well as their plans for charitable giving.

To avoid being on the wrong side of the alarmingly high percentage of advisors who lose clients when their primary contact dies, advisors will need to develop strong and trusting relationships with other family members. That generally translates into offering more services, like financial education, that do not provide an immediate monetary reward, but deliver the long-term payoff of greater client loyalty.

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2. Advisory practices that can deliver concierge-like attentiveness to clients will stand out.

Advisory practices will have to develop the habit and skills to help clients with an even broader range of issues. Being able to coach clients on matters like choosing a health insurance plan during a company or state’s open enrollment period, for example, will increase clients’ confidence that their advisor is someone they can turn to for support when making key life decisions.

Of course, this type of support can often lead to financial discussions. The review of health insurance options, for example, could lead to a conversation about the potential advantages of using health savings accounts as a retirement planning tool to cover future, and not just current, out-of-pocket medical expenses.

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3. Frequent client contact will become even more important.

In the past, it’s been easy to assume that a client who isn’t constantly reaching out during a market downturn doesn’t need extra reassurances.

The days when a once- or twice-per-year check-in was sufficient have passed. Clients want and expect more frequent interactions. The contact doesn’t always have to be an in-person visit. Today, there are so many more opportunities to stay in front of clients, ranging from videoconferences to automated (but still personalized) emails. Advisors who don’t take advantage of these opportunities to remain top-of-mind with clients could lose business to those who do.

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4. Practices that serve younger generations will thrive.

The millennials aren’t kids anymore. The oldest of them are in their early forties, and they’ve already accumulated substantial wealth on their own, even without the significant inheritances they have or will receive from their boomer and silent generation parents and grandparents. Even the assumption that people are in their prime earning years during their late forties and fifties doesn’t always apply today. With the rise of entrepreneurs and internet content creators, many young millennials and even Gen Zers have already acquired significant wealth.

The sensibilities of these younger generations are different. They are more interested in values-oriented investing. The assumption that they prefer robo-advice has been proven wrong, however. A recent survey by Natixis showed that millennials have personal financial advisors at an even higher percentage than boomers. Still, there is no questioning younger generations’ tech savviness and desire for do-it-yourself service options that are easy to use. Advisors who can offer a powerful hybrid of digital and in-person customer service stand a much better chance of keeping younger investors as loyal clients.

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5. The ability to serve the needs of women will be even more critical.

Women now control a third of U.S. wealth — an amount equaling $10 trillion, according to Morgan Stanley. By 2030, that number is expected to balloon to $30 trillion. Advisors will need to be careful to avoid heeding any assumptions about how women invest, like that they’re more risk averse than men. It will be critical to take the time to understand the unique preferences of each client while also recognizing that women often face challenges that men typically don't. These include the wage gap or lower lifetime wages stemming from extended leaves or part-time work during their child-rearing years. It’s important for advisors to recognize and offer long-term planning solutions that account for those challenges.

Advisors also can’t afford to rest easy with untested confidence that their services and communications are gender-blind. Women today don’t have the time or patience to tolerate interactions that are condescending or patronizing. Advisory practices that take the time to assess and eliminate any unintentional biases in their customer engagements and communications are far more likely to keep women as long-term clients.

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6. Clients will have a greater appreciation for owning diverse investments with varied objectives.

The hope that any one category of investments — whether it be tech stocks or cryptocurrencies — can consistently provide outsize returns has been dashed by what transpired in 2022. Investors still need long-term growth, but market events have demonstrated the value of owning a mix of investments that can also serve other needs, including risk management and inflation protection. Advisors who deliver truly diversified portfolios — and client education that demonstrates their value — will stand out.

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7. Effective communication will be necessary to capitalize on the shift to value-oriented investing.

In a year of declining markets, clients’ other priorities often take a back seat to their desire to realize the best returns possible. Still, the preference to own companies that are responsible corporate citizens shows no signs of diminishing and will likely only increase in the coming year, and years, ahead. It can be difficult for investors to understand key differences between ESG, impact and socially responsible investing.

It’s on advisors to do a better job of communicating the benefits of sustainable investing and the most effective approaches to achieve it. Those who can make the process simple and understandable will attract the growing number of clients who want to bring their personal values to their investment plans.

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8. Personalization and customization will have to be more than buzzwords.

The claims of delivering “tailor-made” portfolios are as old as the financial advice business itself. Leading customer service companies like Amazon and Netflix, though, have greatly raised expectations about what highly personalized service means. For advisors, having advanced customer relationship management systems that can identify potential needs even before a client or prospect recognizes them will be a key differentiator.

Offering investment strategies such as direct indexing can provide more opportunities to implement considerations such as tax-loss harvesting or value-based investment inclusions or exclusions than products like ETFs allow. These capabilities will demonstrate an advisor can deliver levels of customization that fully address each client’s unique financial circumstances and personal preferences.

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8 Trends That Will Reshape Wealth Management in 2023

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1. Family-office-like services will be needed for all clients, not just the ultra-wealthy.

2. Advisory practices that can deliver concierge-like attentiveness to clients will stand out.

3. Frequent client contact will become even more important.

4. Practices that serve younger generations will thrive.

5. The ability to serve the needs of women will be even more critical.

6. Clients will have a greater appreciation for owning diverse investments with varied objectives.

7. Effective communication will be necessary to capitalize on the shift to value-oriented investing.

8. Personalization and customization will have to be more than buzzwords.

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8 Trends That Will Reshape Wealth Management in 2023

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More on this topic

1. Family-office-like services will be needed for all clients, not just the ultra-wealthy.

2. Advisory practices that can deliver concierge-like attentiveness to clients will stand out.

3. Frequent client contact will become even more important.

4. Practices that serve younger generations will thrive.

5. The ability to serve the needs of women will be even more critical.

6. Clients will have a greater appreciation for owning diverse investments with varied objectives.

7. Effective communication will be necessary to capitalize on the shift to value-oriented investing.

8. Personalization and customization will have to be more than buzzwords.

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