Annual Survey of Wealth Managers 2022

Social Bonds : A significant financing opportunity amid the pandemic

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Introduction

Private wealth managers face challenges such as margin pressure, operational issues and ensuring regulatory compliance. Acuity Knowledge Partners (Acuity) conducted a study of global private wealth managers for a third consecutive year to understand how best-in-class firms are reorganising themselves after the pandemic and rethinking their client offerings.

Around 100 representatives of leading private wealth management firms responded to our survey, including CEOs, CIOs and heads of research and advisory who play an important role in growing assets under management (AuM) and defining business strategy. The majority of the respondents were from Europe and the US.

Key takeaways from the survey are as follows:

  • Private wealth is set to grow in the coming years despite the headwinds from geopolitical issues and rising inflation, dominated by emerging markets. AuM growth is expected to be driven by traditional and alternative investments.

  • Private wealth managers are likely to grow their AuM through entry into emerging markets, market consolidation and recruiting more investment managers. Another trend likely to contribute to growth is the widening of the client base to include the growing “affluent” class of clients.

  • Top trends that have emerged after the pandemic:

    • The growing number of younger clients emphasises the need for private wealth managers to combine technology and specialised advisory

    • The need to preserve wealth for future generations emphasises the importance of providing holistic advice , 24*7 support and ESG-focused investment advice

  • Offering customisable investment solutions and personalisation emerged as important strategies for maintaining and growing AuM. Hybrid models with digital tools for routine investments and specialised advisory for complex investments were the top choice.

  • Keys to driving front-office efficiency include empowering relationship managers with analytical tools and dashboards, leveraging offshoring to optimise costs and digitalising front-office functions.

  • Regulatory requirements make it mandatory to provide research recommendations for advisory, increasing the need for global coverage and ESG-integrated investment advice. Partnering with an outsourcing service provider was the top cost-effective solution.

  • Costs are increasing due to enhanced focus on sales and marketing, investment management and middle-office and corporate functions. Investment in digitalisation, entry into emerging markets and advisor headcount is likely to account for most of the costs in the coming years.

Acuity’s value proposition

Services we offer to private wealth managers

Acuity’s Support to Private Wealth Managers. We are a one-stop shop, supporting private wealth managers with our deep domain knowledge and experience.

Conclusion

Wealth managers are set to benefit from key macro trends such as growing wealth pools across the world, especially in Asia. Key priorities for wealth managers include expanding the service offering to incorporate non-traditional products such as loans and growth through M&A. Expansion to emerging markets, investing in digitalisation and increasing advisory headcount are key cost drivers in the medium term. Driving relationship manager productivity and leveraging outsourcing are cost-effective means to drive profitable growth. The uncertainty following the pandemic and surrounding the RussiaUkraine crisis highlights the need for wealthpreservation strategies and offering 24*7 support. The increasing share of the tech-savvy younger generations in the customer mix emphasizes the need for investment in digital tools and specialized advisory. We believe private wealth managers who leverage a global operating model that optimizes access to specialist talent pools in cost-effective locations and contextual technology capabilities can gain a competitive edge and leapfrog competition in this environment.

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