The wealth management industry is on the brink of a transformative era, marked by a significant intergenerational transfer of wealth. From 1989, when the total family wealth in the United States stood at an inflation-adjusted $38trn, there has been a remarkable surge to $140trn by 2022, as per the Federal Reserve. Ludovico Niccolini writes

This evolution signifies more than just figures on a chart; it marks an evolution in expectations, preferences, and paradigms shaping the future of wealth management. This shift is getting closer and closer on the horizon, with a vast portion of wealth, approximately $84trn in the US, projected to move from older generations to millennials and Gen X heirs by 2045. Notably, $16trn is expected to move down a generation just in the next decade alone. This change heralds a reimagining of strategies and approaches within the wealth management industry, aligning with the nuanced needs and visions of the new generation of wealth.

Intergenerational wealth

The beneficiaries of this wealth transfer, primarily Generation Xers and millennials, are not passive recipients. They are tech-savvy, informed, and carry a distinct set of expectations for their wealth management experiences. Unlike the generations before them, they seek a blend of tradition and technology in their financial interactions. They require personalised, omnichannel experiences that resonate with their digital-native lifestyles and habits yet value the personal touch’s irreplaceable nuances.

The new generation of investors seeks more than just access to financial services; they prefer a seamless integration of these services into their digital lives. There’s a platonic ideal approach emerging – a hybrid wealth management model that marries computational prowess with human insight, creating a frictionless, omnichannel experience. This approach necessitates real-time, transparent access to their portfolios, bypassing layers of bureaucracy and inefficiency that often characterise traditional wealth management models.

In this evolving landscape, there is a major opportunity for wealth managers to innovate in collaboration with fintech’s thought leaders. Innovations designed to streamline the upstream processes of wealth management are enhancing efficiency and scalability. By focusing on the upstream, fintech providers can ensure that wealth managers are equipped with the tools and insights needed to deliver exceptional service in this new era of wealth management. This technology empowers wealth managers with sophisticated, yet user-friendly tools to manage wealth more effectively and responsively.

Cloud technology has also emerged as a pivotal enabler in this transformative journey, with a proliferation of products such as our WealthSmart offering coming to the fore. It fosters real-time communication across various channels, ensuring consistency and continuity in client experiences. The cloud’s expansive processing capacity allows for the analysis of vast volumes of structured and unstructured data, enhancing the quality of machine-led advisory services. It is not merely a technological upgrade but a strategic tool that enhances flexibility, reduces costs, and facilitates a more responsive and personalised client engagement model.

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Investing in the Future

The modern investor seeks a hybrid approach in wealth management, where human intelligence seamlessly intertwines with technological sophistication. This hybrid approach extends beyond client interactions, permeating investment advice and decision-making processes. It signifies a move towards a more integrated, adaptable, and client-centric model of wealth management, where technology and human expertise converge to meet the evolving needs of investors.

The wealth management industry stands at a crossroads, with the paths of tradition and innovation intersecting. The journey ahead involves embracing change, fostering interoperability, and cultivating a mindset of continuous adaptation and improvement. It requires the industry to invest in creating enriched, personalised experiences that resonate with the new generation’s visions and expectations. By doing so, wealth managers can navigate the complexities of intergenerational wealth transfer, ensuring that they remain relevant, responsive, and ready to thrive in the near future.

Ludovico Niccolini is the director of TS Imagine