INTRODUCTION
The first quarter of 2024 showed a much-welcomed return to profitable growth for many wealth managers. However, to continue to build upon this growth, wealth management leaders must accurately understand what led to the current state of the industry and where it is headed.
BACKGROUND
Despite strong returns in equity markets, 2023 revealed a challenging year for many wealth managers. Higher inflation, economic uncertainty and geopolitical risks hindered investments and squeezed profitability. Clients also capitalised on higher interest rates and moved money into alternatives, such as money markets, reducing overall transactions and profits.
In attempting to adapt, the largest wealth mangers utilised their size and resources to create advantages with owned new client acquisition channels that served broader clients. They further deployed economies of scale, offering "sticky" assets such as banking and had money ready to invest in digital and artificial intelligence (AI). Conversely, smaller firms in the Registered Investment Advisor (RIA) channel, carved out clear niches and responded to customer preferences in an agile manner. However, many firms in the middle stages struggled to compete with their undifferentiated wealth offerings, no clear established client acquisition pathway, aging platforms and lower advisor productivity.
OUTLOOK
As we move beyond Q1 2024, the impacts of various themes across the past 10 years are now maturing, businesses are facing greater challenges, and the Wealth Management industry stands at a critical crossroad.
As such, we present five themes or critical considerations, that all firms now need to confront to succeed.
2024 US Wealth Management Themes:
- Organic growth will be the top priority
- Wealth manager technology will become more consolidated
- Regional banks will place Growing Wealth Management at center stage for strategic agendas
- Client investment portfolio construction will be enhanced
- M&A activity will continue to be robust
Originally published by 21 May, 2024
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