Investment Trends

Six Shifts In Investor Expectations & Behaviors That Are Redefining The Wealth Industry

Study of 2,325 investors and 500 wealth management firms worldwide show how successful providers will adapt to profound shifts in investor expectations

A new study by ThoughtLab reveals six major investor trends that will transform the industry

NEW YORK–(BUSINESS WIRE)–The COVID-19 pandemic has been a watershed event for the wealth industry, accelerating dramatic changes in investor attitudes, behaviors, and expectations. These shifts will require wealth and asset management providers to rethink their strategies, products, services, and pricing models. A new study by ThoughtLab, Wealth and asset management 4.0: How digital social, and regulatory shifts will transform the industry, reveals six major investor trends that will transform the industry:

1. The shift to digital. Because of the pandemic, 40% of investors say digital access has become a greater priority, and 9 out of 10 say that mobile will be their preferred channel in the future. In fact, digital is no longer just the domain of millennial customers; it is now preferred by older and richer investors.

2. Investing with purpose. Over the next two years, 34% of investors will seek ESG investing advice. Investing for the social good is no longer limited to just millennials: 32% of boomers plan to invest in ESG funds vs. 22% of millennials and 63% of billionaires.

3. Democratization. In two years, 67% of investors will want to invest in alternatives, 49% in IPOs, 47% in tax-exempts, and 45% in commodities. Similarly, 58% of investors will want personal financial planning and 53%, day-to-day financial management services. The difference between wealth levels is fading. For example, 69% of mass affluent want to invest in alternatives vs. 65% of VHNW investors.

4. Setting higher standards. About half of investors say that acting in their best interests is the most effective way for advisors to build relationships with them. When selecting firms, investors use ESG criteria: 48% consider ethical business practices, 41% vision and integrity, 39% approach to inclusion, and 34% social purpose.

5. Desire for lower fees and greater transparency. Only 37% of investors are happy with provider’s fees, and 36% with fee structures. Even fewer, 35%, understand how their advisors are compensated. Regulators and fintech competition are adding to the pricing pressure.

6. Investors will switch providers to get what they want. Over the last year, one-third of investors moved 20% or more of their funds to providers that offered what they want. Over the next two years, 44% plan to do so. And 62% said they are likely or very likely to leave firms to follow their advisors.

The winners in the next wealth management era will be those that think outside of traditional investor definitions and create a rich range of products and advisory services, democratized and priced for a wider group of investors...

“In our many years of conducting wealth management research, these investor shifts are the most dramatic seen,” said Lou Celi, CEO of ThoughtLab and the director of the study. “Investor shifts that would have taken years to play out are happening in months.”

Adapting to New Investor Expectations

To succeed in this marketplace, wealth and asset management firms will need to shift from a product- to a customer-centric approach—focusing on the person, not the demographic. That will require reimagining their client segmentation and go-to-market strategies, as well as their range of products, services, and pricing models.

For example, almost two-thirds of providers plan to offer alternatives over the next two years—a top requirement for investors—and 4 out of 10 will offer private placements or venture capital opportunities packaged for a wider range of clients. On the services side, more than half of firms plan to offer goals-based planning and, as a result, they will also add more ancillary financial-related services.

Crucially, firms will need to shift their digital transformation programs into high gear, while finding the ideal calibration between a high-tech and high-touch approach. The research shows that firms that embrace digital transformation on average increase their productivity by 13.8%, AUM by 8.1%, and revenue by 7.7%.

These insights are based on a global survey of 2,325 investors across age and wealth levels, as well as a cross-country survey of 500 investment advisory groups, private banks and trust companies, broker-dealers, robo-advisors, family offices, and retail, institutional, and alternative asset management firms. The study was sponsored by a coalition of top organizations, including Deloitte, eToro, FIS, Salesforce, Appway, HCL, LexisNexis Risk Solutions, Publicis Sapient, Refinitiv, Recordsure, and TCC Group.

“Our study shows that wealth management providers will need to act now to address fast-changing investor expectations. The winners in the next wealth management era will be those that think outside of traditional investor definitions and create a rich range of products and advisory services, democratized and priced for a wider group of investors,” said Lou Celi, the CEO of ThoughtLab and program director.




About ThoughtLab Group
ThoughtLab Group is an innovative thought leadership firm that creates fresh ideas through rigorous research and economic analysis. We specialize in assessing the economic, financial, and social impact of latest technology on cities, companies, industries, and world markets. Our services include fielding business, consumer, investor, and government surveys; organizing executive interviews, meetings, and advisory groups; conducting economic modeling, AI sentiment monitoring, benchmarking, and performance analysis; and developing white papers, eBooks, infographics, and customer-facing analytical tools.


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