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Wealth Management Trends: Research and Insight

David Grinberg
Director of FinTech at TechMagic. Ex-VP of Goldman Sachs. Blockchain and Web3 expert. Experienced engineering manager and CTO.
Wealth Management Trends: Research and Insight

In 2023, wealth management firms and their clients faced profound impacts from tightening financial conditions, slowing economic growth, and geopolitical shifts.

This led to a substantial decline in assets under management (AUM), with the world's 40 largest asset managers experiencing a 14.9% reduction in AUM between the fourth quarter of 2021 and the third quarter of 2022. Consequently, revenues plummeted by 22.9%. The challenging market conditions are expected to persist in 2024, limiting the recovery in AUM, while increased merger and acquisition (M&A) activity and rising competitive pressures reshape the industry landscape.

Amidst these challenges, today's investors, especially the younger generation, exhibit increasingly complex and demanding expectations, seeking diversification in their portfolios. To meet these evolving needs and for many firms to stay competitive, over 70% of wealth firms view investments in technology as a crucial driver of success over the next five years. As a response, they plan to escalate their technology spending in the current year.

So let’s discover where wealth management companies should focus in 2024.

ESG Investing

Sustainable investing is experiencing a surge in popularity as more investors prioritize environmental, social, and governance (ESG) factors in their decision-making processes. This approach involves incorporating ESG criteria into portfolio construction, using alternative investments, offering ESG-focused products, and providing related advice.

According to the "Assets of sustainable funds worldwide Q4 2022 by region" report, European sustainable funds managed over two trillion U.S. dollars in sustainable assets by the end of Q4 2022, surpassing the value of such funds in the United States by more than 10-fold. Moreover, Asia (excluding Japan) emerged as the third-largest region regarding sustainable fund assets, exceeding 50 billion U.S. dollars by 2022.

Bloomberg Intelligence research suggests, the global total of AUM in ESG-related funds has soared to approximately $41 trillion. This remarkable figure represents a significant increase from $22.8 trillion in 2016. Projections from Bloomberg Intelligence suggest that ESG-related investments are poised to surpass $50 trillion by 2025, emphasizing the profound growth trajectory within this sector.

Consumer attitudes toward ESG considerations play a key role in shaping corporate strategies. A survey by PwC reveals that a substantial 76% of consumers declare their intent to stop buying from companies demonstrating poor environmental, employee, or community practices. This underscores the growing influence of ESG factors on consumer choices in wealth management industry, prompting companies to align their strategic positioning with ethical practices to secure market share and favor.

wealth management digital transformation trends

ESG criteria wield substantial influence on contemporary investment strategies, reshaping decision-making asset management processes across the financial landscape:

ESG considerations are seamlessly integrated into portfolio construction, with investors strategically selecting assets aligning with their ESG preferences.

ESG factors are crucial indicators of long-term financial market performance and risk mitigation.

Investors increasingly engage with companies on ESG matters, utilizing shareholder activism to influence corporate behavior.

The demand for ESG-focused investment products, such as ESG funds and green bonds, has surged.

ESG investing in private markets is poised to continue its momentum, with 81% of institutional investors planning to increase their allocations to ESG products. Global ESG investing is projected to exceed $53 trillion by 2025. Presently, 64% of high-net-worth (HNW) investors request an ESG score before investing, indicating a strong inclination towards companies striving to make a positive impact.

As the demand for ESG assets grows, regulatory frameworks will likely follow suit. Asset managers and investment advisors will be required to demonstrate how their ESG strategies are implemented to prevent the misuse of ESG-conscious language. Compliance will necessitate the development of methods to showcase the allocation of assets to ESG funds.

However, the current systems are complex, and financial advisors may face challenges accessing accurate impact data. Consequently, deploying advanced new technologies for analyzing, tracking, and reporting on company- and portfolio-level ESG data will become crucial in this evolving landscape.

However, incorporating sustainability focus into investment advice, particularly with advanced ESG options, is a complex task. Wealth management firms may need to reassess and enhance their technology infrastructure to meet the service expectations of clients. Alternatively, partnerships with WealthTechs or similar organizations experienced in collecting and aggregating ESG data could be explored for investment strategy.

Digital Transformation in Wealth Management

This transformation is marked by the growing reliance on mobile apps, the varying progress among wealth management firms of different sizes, and the resultant enhancements in productivity and revenue.

Investor preferences have undergone a notable transformation, with 40% expressing a desire for digital access to their accounts. Furthermore, an overwhelming 89% of wealth managers prefer utilizing mobile apps to manage their investments and engage with relationship managers.

wealth management digital transformation trends

The significance of mobile apps is underscored by the fact that 46% of investors claim to use them to access their account information. Among millennials, this figure rises to an impressive 72%, showcasing the generational shift towards digital interactions in the wealth management industry.

While larger firms, with assets under management (AUM) exceeding $100 billion, showcase advanced digital capabilities, with over 40% considered leaders in digital transformation, mid-market firms face a more diverse landscape. Nearly 30% of mid-market firms are digital transformation beginners, with 56% actively progressing in their digital journey. This diversity emphasizes the importance of tailored strategies based on firm size and operating model.

Notably, these digitally mature firms have experienced a commendable 13% increase in productivity. This surge in efficiency has a direct correlation with an 8% increase in AUM and an impressive nearly 8% rise in revenue.

Personalization and Customization

The structured utilization of existing customer data is paramount for generating insights that lead to bespoke or semi-bespoke proposals. This approach not only creates a perception of a unique, tailored offering but, if formulated adeptly, is more likely to resonate with the selected subset of customers.

In the shift toward a more digitized and interconnected future, the focal point for firms in 2023 is enhancing the client experience. The current retail investor profile has evolved significantly, prompting wealth managers to extend their focus to emerging client segments too, such as how clients navigate the mass affluent market. With over $70 trillion transitioning from older generations to millennials, this demographic becomes a key investor class.

Moreover, there's a growing preference, with 26% expressing interest, to receive personalized news tailored to their specific investments and holdings, as highlighted in Refinitiv's Wealth Management Report. The momentum towards personalization is underscored by the fact that 64% of millennials and 51% of investors aged 35-54 are willing to pay more for personalized investment products and services, according to the same report. This indicates a substantial market shift towards tailored and individualized financial offerings.

wealth management operations trends

Regulatory Changes

It comes as no surprise that investments in regulatory technology, or RegTech, are experiencing exponential growth. Industry analysts project the RegTech market to surge from $6.3 billion in 2020 to a staggering $22.2 billion by 2027.

Consequently, the significance of alternative and digital compliance solutions is on the rise for wealth managers. By seamlessly integrating compliance into their existing procedures and systems, wealth managers gain immediate access to regulatory insights precisely when and where they are needed, enabling them to prioritize client needs and streamline processes efficiently.

While heavy investment in digital infrastructure and novel touchpoints holds promise in wealth management industry, it also presents security vulnerabilities if not managed effectively. Establishing and implementing a robust cybersecurity framework capable of accommodating digital advancements is imperative, albeit challenging. Clients must have determined confidence that their data, investments, and interactions with advisors remain safeguarded to uphold trust in the firm.

Previously, fines exceeding $200 million were primarily reserved for fraud cases. However, the regulatory deficiencies led to eleven of the world's largest private banks registered investment advisors and brokerage firms being collectively ordered to pay a staggering $1.8 billion in fines (Wall Street Journal). This trend underscores the imperative for wealth managers to proactively adhere to compliance regulations, fostering a culture of diligence and accountability in the wealth management sector.

Behavioral Finance and Decision-Making

The impending Great Wealth Transfer stands as one of the most significant wealth transitions in history, as Millennials and Gen Z are poised to inherit the wealth accumulated by the baby boomer generation. This transition will witness a remarkable shift, with these younger generations moving from holding a modest 3% of the world's wealth to commanding approximately 60% of it. Advisors seeking to connect with these clients must carefully consider the goals and needs of younger clients in these emerging generations.

wealth management fintech trends

The ongoing trend of multi-generational wealth transfer underscores the imperative for wealth managers to adapt their services to cater to the diverse needs of different generations. This adaptation becomes especially relevant for wealth managers as baby boomers pass on their wealth to younger successors.

Integration of AI and Data Analytics

wealth management operations trends

The financial sector's investment in AI for wealth management has been escalating globally. A comprehensive analysis of spending trends indicates a significant uptick, with forecasts indicating sustained growth.

As AI becomes more confirmed in operations, wealth management firms can anticipate efficiency gains and optimize resource allocation.

Leading financial institutions like Goldman Sachs and Morgan Stanley are embracing generative AI tools to generate market intelligence, streamlining the efforts of investment research analysts in information aggregation and processing. The introduction in-house, of tools like Bloomberg GPT, trained on a blend of public and proprietary financial datasets, exemplifies the growing accessibility of sophisticated AI across industry players.

Robo advisors

Cost-effectiveness is a key advantage of employing a robo-advisor. Typically charging less than 1% per year of assets under management, robo-advisors present an affordable option for retail investors, potentially attracting new clients, who were previously deterred by the higher costs associated with traditional wealth management services.

According to Deloitte, Robo-Advisors are expected to manage $16 trillion in assets under management by 2025, offering tailored investment advice and bespoke portfolio management. The Robo-Advisors market is projected to witness a substantial increase in users, reaching approximately 234.30 million by 2027.

Mergers and Acquisitions

wealth management fintech trends

In response to challenges such as higher interest rates and fee pressures, Asset and Wealth Management (AWM) firms are strategically embracing mergers and acquisitions (M&A) and forming partnerships to reshape their business models. These transactions enable firms to enhance capabilities, expand into new asset classes and investor segments, and build channels to capture a larger share of the investor market. Additionally, such strategic moves may move cost structures and lead to scale and operational efficiencies.

The wealth and asset management industry has witnessed M&A activity, with a 47% increase in deals during the first half of 2022 compared to the same period in 2021, according to CapGemini. While this record-high activity may ease in 2023 due to market uncertainty, industry consolidation is likely to persist. Over a third of surveyed firms express interest in buying or selling in 2023, driven in part by the impending wave of advisor retirements.

The upcoming retirements of advisors provide wealth firms with opportunities for M&A or external sales as part of succession planning. The new generation of advisors favor independent channels, making investments in automated systems critical for smoother transitions. Batch processes can facilitate moving books of business and transitioning legacy clients en masse, enabling firms to scale quickly while maintaining service standards.

Many wealth managers focus turning to M&A and strategic partnerships as growth strategies. This involves diversifying into new asset classes, capturing flows from younger investors and emerging distribution channels, and gaining access to untapped geographies and global markets.

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The future of personal finance and wealth management is shaped by a convergence of innovation, shifting demographics, new business models, and evolving investor expectations. While challenges and uncertainties abound, so do opportunities for those who are prepared to embrace change.

In this era of rapid transformation, the synergy between human expertise and technological advancements will define success in wealth management.

Let us embrace change, anticipate trends, and collectively shape a future where personal finance and wealth management thrive in tandem with the evolving needs of investors.


  1. What is ESG investing, and how does it influence financial decision-making?

    ESG investing focuses on Environmental, Social, and Governance factors. It influences financial decision-making by incorporating sustainability criteria, ethical considerations, and corporate governance practices, aligning investments with values and long-term sustainability goals.

  2. How is digital transformation impacting wealth management?

    Digital transformation in retail banking and wealth industry enhances efficiency, accessibility, and personalization. It introduces technologies like robo-advisors, online platforms, and data analytics, revolutionizing how financial services are delivered and experienced.

  3. What role does personalization play in modern wealth management?

    Personalization is paramount in modern wealth management as it tailors financial advice and services to serve clients' individual preferences, goals, and risk tolerance. This holistic approach enhances client satisfaction, engagement, and overall effectiveness.

  4. How does AI and data analytics enhance wealth management?

    AI and data analytics empower wealth managers by providing data-driven insights, automating processes, and enabling predictive analysis. These technologies enhance decision-making, improve client outcomes, make cost savings and increase efficiency y of wealth management operations.

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Ross Kurhanskyi
Head of partner engagement