Wealth managers are looking to expand their investment strategy and 69% have added new asset classes for wealth clients within the last three years. 53% have stated they will do in the next two years.
In addition, 60% now provide exposure to private equity, 52% use emerging market debt, 52% use private credit, 48% use infrastructure, and a further 42% provide access to hedge funds.
This is according to the Wealth Manager Investment Survey from bfinance, the investment consultancy. It gathered data from 120 wealth managers in 29 countries across five continents.
With regards to wealth managers’ strategy, the survey also found that 63% have reduced the proportion of wealth client assets invested in fixed income and 66% have increased allocations to equities. 61% increased allocations to private market strategies.
Passive strategies took a hit as only 21% of respondents expected to increase their use in the next two years.
80% of wealth managers now integrate ESG considerations as part of their offering, up from 37% three years ago.
In addition, 50% integrate impact considerations and 33% stated that they actively consider doing so.
Kathryn Saklatvala, senior director and head of investment content at bfinance, said: “It’s fantastic to see the breadth of investment capability that many wealth managers are now able to offer to clients—the results of this survey show a significantly higher usage of strategies such as private equity, infrastructure, private credit and hedge funds than we’ve seen in other studies, and far more widespread integration of ESG factors into investment.”
“These capabilities have clearly evolved a great deal in recent years, supported by the development of in-house teams and the growing use of external asset managers. Wealth managers are under real pressure to create high-value, differentiated product offerings as well as find new scale-driven efficiencies that can support profitability— the market is increasingly competitive, and this report highlights significant downward movement in fees. Perhaps the most widespread current trend among wealth managers is the introduction of new technologies: we are watching with interest to see whether digitisation can help to deliver the magic combination of scalability and true personalisation that many of these firms seek to achieve.”