Wealth management trends in 2024 are continuing to evolve, with global geopolitical developments, technological advancements, and changing service expectations redefining the nature of client-advisor relationships.
It is true that there is a lot of uncertainty, but the potential risk can be mitigated by increasing the quality and frequency of meaningful client interactions. This is a year of risk and opportunity in equal measure. The firms that appeal to their clients and drive ongoing engagement will come out on top.
Based on insights gained from the Unblu 2024 Digital Wealth Management Outlook, let’s take a look at the modern wealth management trends driving these changes.
1. Complex geopolitical trends
The ongoing impact of conflicts in the Middle East and Ukraine are continuing to impact inflation and contribute to a sense of instability. At the beginning of 2024, this was seen by the Houthi rebel attacks in the Suez canal and has continued as we enter the second half of the year. As of April 2024, the UN Trade and Development (UNCTAD) reported that international trade in goods has decreased by 1%.
The organization also reports further growth deceleration could be expected in direct response to geopolitical tensions, while real wages remain below pre-pandemic levels for workers around the world.
The World Economic Forum’s Chief Risk Officers Outlook 2023 predicted that this “volatility in geopolitical and geoeconomic relations between major economies” is the chief concern that risk officers need to contend with in the coming year. So far, their predictions appear to be well founded.
2. Alternative investment strategies
There is a decline in global wealth – the first time this has happened since 2008, due largely to the appreciation of the US dollar over other currencies. Net private wealth is said to have fallen by USD 11.3 trillion in total, with an average decline of 3.6% or 3,198 per person. Non-financial assets, however, are remaining resilient, particularly when it comes to real estate.
What’s more, as the Boomer generation increasingly passes their wealth on to younger generations, we are beginning to see new ways that the money is being invested.
Gen X and Millennial wealth holders are showing increased interest in cryptocurrencies, ESG investments, hedge funds, and similar options, with a reported 48% of Millennials and 35% of Gen X claiming they’d like to discuss crypto investments with their financial advisors.
3. Increasingly sophisticated service expectations
As with previous years, there is a steady shift in what clients expect from their service. It’s true that investment performance is still a deciding factor. However, the quality of personalization and timely interactions are increasingly becoming defining aspects in achieving customer satisfaction.
And this is a trend that appears to span generations. A Unblu-Compeer report focused on the UK market found that even more traditional clients are moving to digital means of advisor interaction. A reported 51% of HNWIs claim they want self-service tools and digital technologies to receive advice and for portfolio management.
In fact, in Canada and the US, 77% of relationship managers have reported losing business because they didn’t have access to the correct digital interaction tools, although the startlingly large statistic is due to the pandemic fallout. Even so, since the return to normalcy, there has been an increased focus on digital solutions or hybrid channels.
4. The growing female segment
Female investors are gaining increased market control. According to Capgemini, women value quality service more than their male counterparts, alongside putting emphasis on fees, product transparency, and data privacy and security. When it comes to services, 75% state that retirement and inheritance planning is important, while 76% value tax consultation and 71% focus on legal support.
This segment has less confidence in their primary wealth management firms than men and in their ability to grow wealth over the next year. Firms that are able to better personalize their offerings for this segment will gain a competitive advantage.
5. Generative AI is gaining traction
One of the biggest news stories of 2023 was the introduction of Generative AI, with applications across all industries. It’s no different for wealth management firms with 45% of professionals stating they have plans to adopt it in the next year. The technology should be used carefully, however, particularly in a wealth management context. It’s important to avoid issues of bias, and inaccuracy, which Gen AI models experience.
As Deloitte says: “While generative AI can transform the timelines and clarity of customer interactions, its successful implementation will likely require close collaboration across the organization.”
To this end, organizations should focus on using Generative AI in specific use cases, such as with Unblu’s Conversational AI offering.
6. Risk tolerance of cybersecurity and fraud
Given the rise of artificial intelligence, cybersecurity and fraud are increasingly challenging to address. This year will see a combined spending of $215 billion on cybersecurity, which is an increase of 14.3% compared to 2023.In a wealth management context, there are two areas of risk that need special attention. The first is in avoiding regulatory fines, which we outline more in the next section. And this is no idle threat – in total, since 2021, there has been a total of $2.75 billion in fines issued to financial services companies.
The second area that might require a focused plan of action is the issue of digital signature fraud. This comes in the wake of a landmark 2023 fine where LPL Financial brokers were found to have falsified signatures.
7. Secure and compliant messaging channels
The issue of security and compliance is top of mind for many advisors. The fact is that clients want to be able to talk with their advisors when they see fit, without sacrificing convenience. This means that many have turned to popular messaging platforms, which present substantial risk for firms in terms of regulatory compliance.
To put it simply, in 2024, there is no excuse for wealth advisors to still be using applications such as WhatsApp or Facebook Messenger. There are high-quality Secure Messenger alternatives available, allowing for an omnichannel experience that also complies with regulatory requirements.
8. Mobile-centric client experiences
Mobile experiences are continuing to become increasingly important for wealth management clientele, particularly among younger investors. In fact, the demand for high-tech digital experiences is so high that many are more likely to turn to Big Tech (i.e. Apple, Amazon, Google, etc) for their primary investment firm instead of more traditional offerings.
Nowadays, client expectations involve using trading tools, gain real-time insights, or track tax documentation directly from their mobile app. It’s important to note that these features shouldn’t come at the expense of real, authentic service, particularly during risky market periods. A total of 54% of investors between 18–25 don’t trust robo-advisors during market volatility.
9. Relationship manager productivity
It is becoming ever more difficult for relationship managers or digital wealth managers to remain on top of the administrative burden associated with their roles. This is even having an effect on their ability to deliver quality service.
This is a use case where Gen AI can aid financial advisors and RMs, helping with onboarding, processing routine transactions, document verification, KYC checks, and compliance, among other areas.
Unblu has also been shown to help in this way, leveraging a mixture of AI-enhanced secure messaging, video and voice, and visual collaboration to offer clients and advisors the freedom to exchange ideas, information, and documents.
This has led to a 25% increase in front office productivity and a 5–10% boost in time RMs spend with clients.
10. Appealing to younger generations with social media
While only 3% of Baby Boomers use social media to make investment decisions, Millennials and Gen X are increasingly turning to these channels. A reported 33% and 21% respectively claim to use social media in this way, especially on YouTube and X (formally Twitter).
For wealth firms, this activity on social media platforms and forums can provide insights into current opinions among specific private market segments. It also provides an opportunity to have a positive impact by attracting new and highly active investors, while increasing long-term engagement.
Meeting client demands with digital transformation
Increased client collaboration is undoubtedly the key marker of success in wealth management contexts. With more meetings and dedicated spaces for client interactions, advisors are better able to scale assets under management growth and ensure ongoing loyalty.
In such a volatile year as 2024, this is where wealth management firms should focus their efforts. The top areas to improve are in minimizing core activities (and improving efficiency), or enhancing security or compliance protocols, while also offering a more varied product offering.
For more in-depth insights into current industry trends, see the Wealth Management Outlook here.
