In the face of cost hike, downward pressures on fees and new competition, wealth managers in Europe should brace up to reshape their business models to drive success, according to a report by JPMorgan Asset Management.
The study found that waning trust among rich clients is leading investors to hold more money in cash and invest directly in property and private equity, in turn making wealth managers irrelevant, reports The Financial Times.
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Among the managers surveyed, about 80% confessed that the quality of advice offered to clients should be improved.
The report also pinpoints the shift in the client base as assets are transferred to a younger generation of investors.
Claude Kurzo, head of strategy and business development at JPMorgan Asset Management, said that quality of advice can be enhanced through adopting technological advances, online tutorials and live video chats which can help managers gain better insights on their clients.
The younger generation of investors are more tech-savvy and keen to direct their money to entrants such as online managers that would offer technologies and personalized services at lower costs, the FT further quoted him as saying.
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By GlobalDataKurzo also stressed on the need for wealth managers to deepen relationships with fewer third-party asset managers.
The report also found that that wealth management revenues and profits are set to rise 7% per year over the next five years, while financial assets held by rich investors across Europe are predicted to increase from 7tn in 2013 to 9tn in 2018.
Further, a vast majority of the survey respondents stressed on the need of consolidation among wealth managers amidst cost pressures which increase the asset minimum necessary to reach profitability.
