2021 Trends to Watch in Wealth Management

The pandemic has reshaped business on so many levels, and wealth management is no different. Robo-advice; industry consolidation; greater concern for environmental, social, and governance (ESG) principles; and a shift towards greater use of technology in the personalization of wealth management were all important trends before COVID-19. In many cases, the pandemic has served to accentuate such factors. This report identifies the key trends that will impact the wealth management industry in 2021.

This report informs wealth managers and their strategy teams of the key developments emerging across the industry and how best to respond to these changes. It examines key areas such as regulation, HNW asset allocation strategies, customer targeting, and cybersecurity, with analysis supported by findings from our propriety surveys of wealth managers and investors.

Scope

• Only weakly impacted by the crisis, mass affluent wealth will attract more competition for key private wealth brands.
• Investor loyalty and retention is down, with many wealth managers concerned about churn.
• There has been a major buildup of cash and near-cash assets under management (AUM) in HNW portfolios.
• Industry consolidation will occur at all levels of the industry as gaining economies of scale becomes more important in a sluggish recovery market.
• The big boost to non-resident assets will be driven by investors from markets hard hit by the pandemic, such as the US, Brazil, and the UK.

Reasons to Buy

• Understand the key trends impacting the wealth management industry in 2021 and how to respond.
• Discover the effects of COVID-19 on the offshore industry and how to benefit from new trends.
• Understand the best approach to client portfolio strategies given current market conditions.
• Learn about risks resulting from the industry's growing dependence on technology and how to hedge against cyber threats.
• Stay ahead of your competitors by reaching out to new emerging client demographics that offer huge revenue growth potential.

Table of Contents

Table of Contents

1. Executive Summary

• 1.1 Market overview
• 1.2 Key findings
• 1.3 Critical success factors

2. Major Private Wealth Brands will Increasingly Target Mass Affluent Individuals

• 2.1 Mass affluent AUM will surpass $77tn globally in 2024
• 2.2 Asia Pacific remains bullish on the mass affluent opportunity

3. Personalization will be Key for Investor Loyalty

• 3.1 2021 calls for a focus on new investors who flooded the market to capitalize on heightened volatility
• 3.2 Embracing emerging technology will be helpful in reaching personalization goals

4. ESG Products are Becoming Mainstream, but Rapid Growth Comes with Pitfalls

• 4.1 Global ESG assets almost doubled over the past four years…

5. Asset Allocation Trends

• 5.1 Diversification and risk aversion are major themes…
• 5.2 Offshore wealth is set for a banner year in 2021

6. Major Industry Consolidation is in the Offing

• 6.1 The slowdown in wealth management-related M&A is set to reverse

7. Appendix

• 7.1 Abbreviations and acronyms
• 7.2 Definitions
• 7.3 Methodology
• 7.4 Secondary sources
• 7.5 Further reading

List of Figures

List of Figures

• Figure 1: By 2024, the mass affluent will hold over $77tn in liquid assets
• Figure 2: More than any other region, Asia Pacific wealth managers see the mass affluent as an opportunity
• Figure 3: In line with previous crises, client retention has suffered and will continue to be an issue in 2021
• Figure 4: The majority of individuals in China favor digital providers
• Figure 5: The majority of individuals across most generations agree that personalized advice is important
• Figure 6: A multi-channel experience is in demand among investors from all generations
• Figure 7: Almost 71% of wealth managers offer socially responsible investments
• Figure 8: Betterment has a well-developed ESG proposition
• Figure 9: Equity holdings have fallen sharply
• Figure 10: Cash and near-cash products are forecast to experience the strongest rise in demand
• Figure 11: Demand for direct holdings is on the rise in the alternative investment space
• Figure 12: 2020 saw a fourth consecutive year of growth for the offshore investment market
• Figure 13: The world can expect more wealth to flow out of North America
• Figure 14: The wealth industry has seen little in the way of major deals in recent years
• Figure 15: COVID-19 is expected to wipe out the impressive gains in profitability made by the industry in 2019