Wealth management is just one of many industries facing a huge demographic change among its consumers. Money and influence are shifting away from older generations and predominantly male investors toward a greater balance across ages and genders.
Financial professionals and their service provider partners need a plan to respond to this change, both in terms of how they deliver relevant and high-value offerings to clients and how they source the next generation of talent.
For wealth managers, retirement-focused services will likely remain essential, but the desirable clients of tomorrow will expect help with other financial goals — and goal-setting itself. They’ll further expect to be served by advisors who take a consultative, relationship-based approach over a transactional model.
Beyond retirement, they’ll want help managing taxes, meeting the cost of health care and education, facing the challenges presented by simultaneous caregiving for older parents and young children, and estate and inheritance issues. The range of skill sets demands more team-based approaches and the use of third-party experts and technology platforms to get the job done.
This is the way Bill Crager, the co-founder and former CEO of Envestnet, views the immediate and longer-term future of wealth management. He detailed his perspective during a recent panel discussion in New York, hosted by Bloomberg’s Claire Obusan, held to mark the recent publication of a book by April Rudin, the wealth management marketing and strategy expert, co-written with Nick Rice, director of the Brunswick Group.
In “Wealth Management With a Difference: Your Guide to Achieving Client, Generational, and Business Success,” Rudin and Rice share insights from more than 80 industry executives around the world. Crager agreed with the authors’ basic premise: There has never been a better time to be in wealth management, but firms can't take success for granted.
Success, he said, will require firms to embrace — and more importantly, effectively integrate — technology that can help them deepen and scale their offerings in the key areas already mentioned. It will also require a focused next-generation talent development strategy that offers genuine career paths and meaning in the workplace beyond financial performance.
“What inspires me is that there are firms that are doing this well,” Crager said. “I’ve met probably four or five of them in the last year without looking that hard. So, I think at least some people are getting the message.”
Crager said he saw these trends develop during his tenure co-founding and serving in the top ranks of Envestnet. That chapter came to an end nearly two years ago, with Crager’s departure as CEO and Envestnet’s $4.5 billion sale to Bain Capital, but he’s since had an opportunity to view the industry differently as a founder of iAltA Holdings, a private markets infrastructure company.
He said he was drawn to the new role for a few reasons.
“One thing that I can tell you is that I’m happy to be back in startup mode — focused on founding something and building it really from the ground up,” Crager said. “Envestnet had gotten so big that I can tell you frankly that it was a little uncomfortable for me to be in that position. What I’m most drawn to is creating a vision and building around that vision, so it was time for me to depart Envestnet and I'm happy with where I am at today.”
Promoting broader access to private market investments for more groups beyond the ultra-wealthy, Crager said, is especially important when so much value creation is not happening in the public markets and therefore is out of reach for many investors. At the same time, he added, achieving iAltA's ambitious vision will require a big education effort.
"Advisors themselves may have improved their knowledge regarding accessing and managing private market investments in recent years, but there is still a lack of full awareness among the public," Crager said.
What’s notable, Crager and the other panelists agreed, is that investors with deeper knowledge of the liquidity and return characteristics of private market investing are shown in surveys to be more comfortable with their use — especially when facilitated by a professional advisor.
"We firmly believe this will be another way for advisors to stand out in the future," Crager said.
Pictured: Bill Crager
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.