Despite the recent disappointing results of Swiss private banks, a new study predicts continued strong growth in wealth management despite the myriad crises currently prevailing.
The Ukraine war, a European energy crisis, global supply chain problems, rising interest rates, and economic worries: The list of factors shaking up the markets and asset classes is getting longer and longer.
But these challenges do little to change the forecast that the wealth of rich individuals and families will continue to swell in the coming years. According to a study by Bain & Company, liquid assets available worldwide are expected to increase by a good $90 trillion to $229 trillion by the end of the decade. According to Bain's calculations, this would also double revenues in asset management.
New Customers, New demands
With the trend toward digitalization and the transition of wealth to a new generation, the industry has to adapt, the study continues. Customers of generations Y and Z have different demands requiring new business models and offers from financial service providers.
Of these generations, an estimated 250 million will have annual incomes over $100,000 by 2030, according to the report, making them potential customers. The entry of the «baby boom» generation into retirement age is also driving demand for wealth solutions.
However, investment behavior will change in eight years. The experts assume that more than half of the assets will then be invested in sustainable products, digital investments, and private market investments such as private equity and debt.
Clear Positioning Necessary
Financial service providers could certainly benefit from this growing sector in asset management, but they need to position themselves as full-service providers, customer magnets, or niche players.
«Financial services providers need to transform their offering, distribution, and business model if they want to be successful in wealth management in the coming years,» says Bain partner Markus Habbel. Generations Y and Z are much more concerned with the topic of investment than their parents and act more independently, adds Christine Weber-Vossen, Associate Partner at Bain and co-author of the study.
Hybrid Approach
On the one hand, financial services providers need to work flat out to expand their digital offerings. In certain situations, individual personal advice is also important to the younger generation. In the future, clients' expectations in wealth management can only be met with a hybrid approach.
