With just two weeks until the new year, most businesses will be looking ahead to what opportunities and challenges 2017 may bring.
This year has been difficult for wealth managers, with WH Ireland recently describing 2016 as "one of the toughest industry environments since the financial crisis of 2008".
The firm pointed to regulatory pressures driving up costs as a key hurdle, but organisations have also battled digital disruption, economic and political upheavals, and changes in client expectations.
But what does next year have in store for wealth management? Let's take a closer look at some of the hottest trends tipped to transform the industry in 2017.
At Affinity Capital, we often explore how important technology is to the financial services industry and wealth management firms. The growing demand for solutions that drive efficiency, cut costs and streamline services for clients shows no signs of abating.
In fact, a recent Capgemini report revealed that technology was a key ingredient for several of its top ten wealth management predictions in 2017:
Furthermore, a recent report from Confluence predicted that RegTech – a subset of FinTech that involves technologies able to quickly and accurately deliver regulatory requirements – will boom in 2017. The organisation said these innovations can help transform back-office functions for asset managers.
The transfer of assets from baby boomers to their heirs is an ongoing process that will provide ample opportunities for wealth managers over the coming years – and 2017 is no exception.
Wealth managers should concentrate on building multigenerational relationships across their client base.
Deloitte research estimates that US$58.1 trillion (£46.9 trillion) worth of assets will change hands in the 55-year period from 2007 to 2061. However, this trend creates a problem for some wealth management firms, as 90 per cent of intergenerational heirs swap advisors.
Wealth managers should concentrate on building multigenerational relationships across their client base, while also catering to the digital demands of younger investors.
The finance industry must also learn the defining characteristics of each generation in order to take advantage of the huge transitions set to occur in 2017 and beyond.
The adoption of new technologies and the ongoing wealth transfer between generations mean new investor profiles are beginning to emerge. Deloitte has dubbed this the 'rewired investor', which includes millennials and Generation X investors, as well as tech-savvy baby boomers.
As clients become increasingly demanding, wealth managers will be expected to provide a range of different service delivery models to satisfy the varying preferences of investors. For example, completely automated platforms (such as robo-advisers) are already popular with younger investors and this is likely to continue next year.
However, Capgemini revealed that holistic goals-based financial planning and wealth management models will become widespread, providing more sophisticated offerings to clients who prefer a personalised approach.
A range of hybrid models that exist between fully automated and customised services will also become more widely available. Ultimately, wealth managers that fail to offer a choice of client relationship models could quickly find investors switching to competitors.
Clearly, 2017 will continue a number of trends that have been building momentum over recent years, while introducing a few new ones.
Many of these developments overlap, with technology being one of the primary drivers behind changing investor attitudes and the delivery of optimal services from wealth managers.
The challenge for many firms will be whether they can get ahead of these trends and ensure their operations are ready to tackle the challenges the finance industry may face next year.