The future of wealth management

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Wealth management will change and evolve in the coming decades, influencing how you receive financial advice.

Future change will happen in part because the profile of investment clients will change. A 2014 Credit Suisse survey estimated half of the world’s population was under 30 years old.

This group will shape the future. They will earn and they will inherit.

The global management consulting firm Accenture has reported an estimated $30 trillion will be passed down to the next generation over the next 30 to 40 years in the U.S. That is the largest intergenerational transfer of wealth in history.

Many firms are working to make artificial intelligence (AI) a crucial part of financial advice.

My prediction is clients with smaller investment accounts will be significantly served by AI-powered distribution channels, as it’s not economical for them to work directly with highly qualified, costly, professionals. Many Canadian financial institutions have already started to segregate clients based on asset size.

AI will play an important role in how financial advice is distributed. However, younger investors have grown up with technology. They are used to obtaining services with a swipe or a click on a smartphone.

The wealth management industry will need to offer more.

According to the Young Investors Organization, Sponsored by Credit Suisse at the 2019 World Economic Forum Annual Meeting, the human factor is more important in wealth management than AI. A bit different from what the media is saying.

Clients with significant assets will demand a “high-tech high-touch” approach, combining advanced technology with strong personal relationships. AI will support this relationship but won’t drive it.

This group will want a trained professional to understand their financial objectives but more importantly to bring the human element into the equation.

Financial advisors serving this market will need strong empathy and personal skills combined with technical ability in the areas of financial planning, investments, tax and estate planning.

The world is changing, including the important area of wealth management. Firms will adapt and change and those that don’t will make way for new competitors to enter the market.