2018: Trends to Watch in Global Wealth Management

  • ID: 4456840
  • Report
  • Region: Global
  • 69 pages
  • GlobalData
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  • Acorns
  • BNP Paribas
  • Credit Suisse
  • Hargreaves Lansdown
  • Morgan Stanley
  • UBS
  • MORE
2018: Trends to Watch in Global Wealth Management


Regulation, innovation, and intergenerational change will be key items on wealth managers’ agenda in 2017. Compliance with the now in-force Common Reporting Standard (CRS) and Markets in Financial Instruments Directive II (MiFID II) will be as crucial as responding to shifting client demographics and changes to the investment landscape, fueled by cryptocurrencies growth and central banks revising monetary policies. In this environment, striking the right balance between retaining existing clients and hunting for new ones will bekey.

Key findings include in this report:
  • Central banks potentially increasing interest rates in 2018 will affect the asset allocation landscape.
  • 64% of wealth managers agree that intergenerational wealth transfers will be a big source of new business in the coming years.
  • New investment products such as impact investments and cryptocurrencies will become mainstream. Meanwhile HNW lending is also an opportunity to diversify providers’ sources of revenue.
  • Use of automation and technology in general will increase as providers look to reduce costs.
  • Robo-advisors will continue to grow, but their share of the overall market will not change drastically.
Educating clients about risks and preparing them for market shocks remain fundamental to client retention, regardless of how affluent or sophisticated they are.Preparing for millennials and younger generations coming into wealth is essential to ensure sustainable business growth. This requires managers to reach out to and build relationships with the youth in an appropriate way and at the appropriate time, in addition to providing innovative products.

The report "2018: Trends to Watch in Global Wealth Management", informs wealth managers and their strategy teams of the key developments emerging across the industry - and how best to respond to these changes. The report examines in detail key areas such as regulation, customer targeting, and product and service provision, with analysis supported by findings from propriety surveys of wealth managers and investors.

Specifically the report:
  • Considers the impact of different regulation (including the Common Reporting Standard, General Data Protection Regulation, and MiFID II) on the industry.
  • Analyzes shifts in investors’ asset allocation preferences and their impact on wealth managers’ strategies.
  • Reveals millennials’ product and service requirements and considers successful client acquisition and retention activities.
  • Discovers key trends in product innovation, exploring areas such as HNW lending, cryptocurrencies, ETFs, impact investing, and innovative fintech products.
  • Examines the latest developments in the robo-advice market and future M&A activity in the sector.
Companies mentioned in this report: Acorns, Active Allocator, Aviva, Barclays, BearingPoint, Betterment, Blackrock, BNP Paribas, BrickX, Carmignac, Charles Schwab, Citigroup, Cordium, Credit Agricole, Credit Suisse, Deka, Deutsche Bank, Fidelity International, Gambit, Goldman Sachs, Gowling WLG, Hargreaves Lansdown, HNW Lending, ICICI Bank of India, IHS Markit, Lloyds Bank, Maecenas, Moneybox, Morgan Stanley, Nutmeg, Revolut, Scalable Capital, St. James’s Place Wealth Management, State Street, Stockspot, Tobam, UBS, US Bank, Vanguard, Wealthify, Wealthsimple, Wells Fargo, Westpac.

  • Central banks potentially increasing interest rates in 2018 will affect the asset allocation landscape.
  • 64% of wealth managers agree that intergenerational wealth transfers will be a big source of new business in the coming years.
  • New investment products such as impact investments and cryptocurrencies will become mainstream.
  • The use of automation and technology in general will increase as providers look to reduce costs.
  • Robo-advisors will continue to grow, but their share of the overall market will not change drastically.
Reasons to buy
  • Understand the key trends impacting the wealth management industry in 2018 and how to respond.
  • Discover drivers behind intergenerational change among your clients, and the customer targeting strategies that will help you retain existing clients and engage with new customers.
  • Learn about key regulatory developments and how to leverage them to your organization’s benefit.
  • Stay ahead of your competitors by keeping up to date with product innovation in the industry.
  • Discover how HNW asset allocation preferences are set to evolve in 2018, and what this means for your business.
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  • Acorns
  • BNP Paribas
  • Credit Suisse
  • Hargreaves Lansdown
  • Morgan Stanley
  • UBS
  • MORE
1.1. Market summary
1.2. Key findings
1.3. Critical success factors

2.1. Wealth managers need to get ready for quantitative tightening
2.1.1. Key wealth markets are normalizing their monetary policies in 2018
2.1.2. Wealth managers should discuss the effects of higher rates on the typical HNW portfolio, as HNW investors remain unprepared
2.1.3. Amid limited demand for cash products, a reshuffle of the typical bond portfolio is called for
2.1.4. In the equity space we will see a focus on financials and consumer staples
2.1.5. Rising demand for commodities should be redirected to gold or other precious metals
2.1.6. In the offshore space, access to the US markets will be even more important than currently

3.1. All private wealth managers will need to adapt to CRS
3.1.1. Offshore wealth managers are directly in the firing line of CRS
3.1.2. Automation of CRS compliance will become a competitive advantage
3.1.3. Any repeal of FATCA would create a huge competitive advantage for US wealth managers
3.1.4. CRS is prompting divestment of certain types of high-risk business in wave one countries
3.1.5. Private wealth managers based in Switzerland should benefit from CRS
3.2. MiFID II entered into force on January 3, 2018
3.2.1. Wealth managers expect MiFID II to encourage price competition
3.2.2. Many EU governments are still struggling with MiFID II transposition
3.2.3. Research teams will downsize following MiFID II implementation
3.2.4. European countries will not be the only ones affected by MiFID II
3.3. GDPR and the fiduciary rule will add to the compliance burden
3.3.1. Banks will have to roll up their sleeves as the GDPR deadline approaches
3.3.2. The US is preparing for implementation of the fiduciary rule
3.4. Changes to non-domicile legislation will fuel HNW migration
3.4.1. UK long-term non-doms will no longer benefit from special status
3.4.2. New rules will impact HNW offshore investments
3.4.3. Other European countries willing to reduce non-doms’ tax bills will compete with the UK

4.1. The new generation of clients require different acquisition strategies
4.1.1. Intergenerational wealth transfers are an opportunity for AUM growth
4.1.2. The younger generation is also growing its own wealth
4.1.3. Millennials are digital-savvy, but they still expect an omni-channel proposition
4.1.4. Millennials take word of mouth to the next level
4.1.5. Millennials are more likely to use multiple providers to manage their wealth, with their main bank dominating investment share
4.1.6. Investor education will be an important factor in millennial retention
4.2. Client targeting strategies will differ depending on the provider’s business model
4.2.1. Being part of the investor journey from its very beginning is key
4.2.2. Providers with a wide range of products are in a privileged position, and should focus on cross-selling
4.2.3. Private banks should reach millennials through their grandparents
4.2.4. Challengers should do more than just offer investments
4.3. Retention management has to become more important amid increasingly uncertain investment conditions
4.3.1. Downward volatility has the potential to cause significant customer churn
4.3.2. The importance of the advisor relationship poses a challenges to wealth managers
4.3.3. Education will become increasingly important, andinvestors must be made aware of the effects volatility could have on their wealth

5.1. With fee income growth constrained due to competition revenue sources will diversify, and HNW lending will become more important
5.1.1. US securities-based lending innovation has made it a common service among even small advisors
5.1.2. Recent innovation aims to provide lending facilities to even small-scale investment advisors
5.2. Wealth managers have long prioritized managing both sides of the client balance sheet
5.2.1. Many private wealth managers have prioritized growing the earning asset base in the aftermath of the global financial crisis
5.2.2. UK-based private wealth managers have focused on using loans to tie in investment clients
5.2.3. Swiss private banks have used securities-based lending to appeal to entrepreneurs
5.3. New investment products will become mainstream
5.3.1. Tighter regulation and higher returns will tempt more investors into new alternatives
5.4. For millennials investments are personal, which creates room for impact investment growth
5.4.1. Offering impact investment services will become more important as the next generation takes over the reins
5.4.2. Credit Suisse and UBS are strongly positioned to benefit from rising demand for impact investments
5.4.3. Impact investing will eventually experience greater demand than traditional philanthropy
5.4.4. Impact investment demand will be further supported by government incentives
5.5. Alternative finance opens opportunities for those seeking high returns, with P2P lending a particular standout
5.5.1. P2P lending platforms can help wealth managers expand their target client base - and HNW investors will also want in
5.6. Recent regulatory tightening will result in more investors seeing cryptocurrencies as an investment rather than a speculation
5.6.1. Short of outright bans, regulatory tightening will add respectability to the market
5.6.2. The value of bitcoin and ethereum mean traditional wealth managers can no longer ignore them entirely
5.6.3. Wealth managers should capitalize on cryptocurrency demand before first-mover advantage is lost
5.6.4. Wealth managers need to ensure their clients can quickly access and pay using cryptocurrencies
5.6.5. Funds and investment vehicles with cryptocurrency themes can be useful alternatives to direct investing
5.6.6. Wealth managers must acknowledge the speculative bubble without discounting the entire sector
5.7. ETFs are forecast to reach $7.6bn in value by 2020, with younger investors driving growth
5.7.1. Younger consumers have driven ETF interest but retiring baby boomers also see value, suggesting growth will continue to be rapid
5.7.2. The portfolio implications are varied, but wealth managers can benefit
5.8. Fintech will lead product innovation
5.8.1. Traditional investments can evolve into new opportunities for securities investing
5.8.2. Other illiquid assets could effectively be converted into securities by enterprising wealth managers

6.1. Wealth managers will continue to buy stakes in fintechs
6.1.1. Robo-advisors need to expand their propositions to keep their clients
6.1.2. Robo-advisors will not be able to afford outflow of clients
6.1.3. Incumbents are entering the robo space through acquisitions
6.1.4. The future of financial advice leaves room for different providers, although more acquisitions are likely
6.1.5. Robo-advisors and traditional players will continue to co-exist, with the latter’s dominant position unchallenged

7.1. Abbreviations and acronyms
7.2. Definitions
7.2.1. Baby boomers
7.2.2. Generation X
7.2.3. HNW
7.2.4. Mass affluent
7.2.5. Millennials
7.3. Methodology
7.3.1. 2017 Global Wealth Managers Survey
7.3.2. 2016-17 Mass Affluent Investor Surveys
7.3.3. Exchange rates

List of Figures
Figure 1: Equities account for the largest share, and are set for growth over the next 12 months
Figure 2: HNW investors only hold a bare minimum in cash products to ensure liquidity
Figure 3: US Bank educates its client base about the effects of rising rates
Figure 4: Equity investments dominate the typical HNW offshore portfolio
Figure 5: Tax efficiency and privacy may come into conflict among offshore investors
Figure 6: Reducing compliance burdens will see the most growth in investment from wealth managers in 2018
Figure 7: European wealth managers believe MiFID II will increase price competition
Figure 8: Only 11 countries have fully completed MiFID II transposition requirements
Figure 9: Wealth managers consider intergenerational transfer of wealth an opportunity to grow business
Figure 10: Millennials use multiple communication channels
Figure 11: Millennials are most likely to work with their main bank to arrange investments
Figure 12: Market volatility has the potential to cause higher churn rates
Figure 13: Longstanding advisor relationships reduce the risk of churn
Figure 14: Political uncertainty is driving asset allocation decisions in the HNW space
Figure 15: Political risk is particularly pronounced in China, France, the Philippines, and Turkey
Figure 16: Morgan Stanley has ramped up its lending through its wealth management division
Figure 17: GS Select brings securities-based lending to small advisors
Figure 18: There is a significant gap between supply of and demand for impact investments
Figure 19: Demand for philanthropy and impact investments is expected to rise in 2018
Figure 20: Although there have been bumps, the rise in value of blockchain investments has been dramatic
Figure 21: ETFs have routinely grown AUM
Figure 22: Younger investors drive ETF uptake, but older segments are showing increased interest
Figure 23: Only superior returns will counter the liquidity and cost attractions of ETFs, leaving the fund portfolio dominated by beta returns
Figure 24: BrickX offers a unique method of investing in property
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  • Acorns
  • Active Allocator
  • Aviva
  • Barclays
  • BearingPoint
  • Betterment
  • Blackrock
  • BNP Paribas
  • BrickX
  • Carmignac
  • Charles Schwab
  • Citigroup
  • Cordium
  • Credit Agricole
  • Credit Suisse
  • Deka
  • Deutsche Bank
  • Fidelity International
  • Gambit
  • Goldman Sachs
  • Gowling WLG
  • Hargreaves Lansdown
  • HNW Lending
  • ICICI Bank of India
  • IHS Markit
  • Lloyds Bank
  • Maecenas
  • Moneybox
  • Morgan Stanley
  • Nutmeg
  • Revolut
  • Scalable Capital
  • St. James’s Place Wealth Management
  • State Street
  • Stockspot
  • Tobam
  • UBS
  • US Bank
  • Vanguard
  • Wealthify
  • Wealthsimple
  • Wells Fargo
  • Westpac
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