When it comes to managing their wealth, HNW individuals most often seek the advice of a professional to make investment decisions and ensure their portfolio stays on track. With wealth managers around the world expecting demand for investment services to increase over the next year, they will do well to adapt their proposition to cater to the range of HNW investor needs.
According to GlobalData’s 2016 Global Wealth Managers Survey, discretionary management services are the most popular of portfolio services. With 52% of high net worth (HNW) assets held in this mandate, discretionary services enable the investment manager to make portfolio decisions on behalf of the HNW individual once they have evaluated the client’s investment preferences and goals.
Furthermore, the demand for discretionary asset management is expected to climb. This is beneficial to wealth managers that offer this as part of their proposition, because discretionary mandates usually offer higher margins and there is less of a dependency on transaction volume than in other services.
At the same time, many wealth managers believe that demand for other investment services will increase. Advisory mandates, for example, will see the greatest increase in demand over this same period, as illustrated in the figure below.
HNW investors may choose advisory mandates for managing their wealth because it enables the investor to maintain a level of control over their investments while having access to expertise from professionals.
Automated services are also piquing the interest of HNW audiences. Time-poor investors who are comfortable placing their wealth in the hands of algorithms will appreciate the ability to outsource the day-to-day management of their portfolio, while still having the option to make some investment decisions.
Looking ahead, a notable increase in demand is expected across wealth management services. As such, providers will do well to ensure their proposition resonates with a range of audiences and caters to those who readily adopt digital capabilities.