The COVID-19 pandemic was the global story for 2020 and has had a fundamental change on the Wealth Management Industry.
Since 1980, the Wealth Management Industry in Australia has doubled its share of the local economy. It has also doubled its share of economic activity within the economy. Part of the reason for this involves the changes to the pension system that were passed in the 1990s. Another component is the fact that incomes have risen in Australia, which have made the services provided by this industry an invaluable part of daily life.
COVID-19 has been an awakening for the sector dramatically accelerating digital and transforming the sector through technology. Social, demographic, and technology changes are driving change in the old guard and forcing an evolution of wealth platforms.
Wealth management is big business. In fact, it is estimated there were $104 trillion of global assets under management (AUM) in 2020, and in Australia $4.3 trillion. PWC reported that the sector is expected to see continued growth of up to 5.6% a year by 2025, to $147.4 trillion globally.
Wealth Management in Australia, unlike in other parts of the world, by definition and practice is not a service exclusive to HNWI’s (high net worth individuals). According to the RBA, wealth management is defined to include various forms of funds management (managed funds, life insurance, and superannuation) and financial advisory services.
Escalating social and demographic changes to the traditional client base, together with the steady adoption of digital delivery, are transforming the provision of next-generation platforms, products, services, and advice across the sector.
Moving from face-to-face consultation to mobile and digital delivery, cloud-based services, and personalisation, the game is changing when it comes to wealth management.
In a sector once dominated by the baby boomers that required face-to-face consultation and a personalised service, it is being replaced by millennials that are tech-savvy and open to less face-to-face interaction, demand greater transparency, and accountability, and are not afraid to shop around for a better deal.
Whilst strong performance will remain crucial, delivering it will take more than healthy financial returns. For these younger generations, wealth won’t just be about money. It will also be about meaning, purpose, connection, and making a positive difference in the world. This orientation will create a very different future for wealth management providers.
In a recent report by Accenture-Orbium, Wealth Management C-Level Survey 2020, it identified six global megatrends that are substantially affecting both industry growth and profitability with the Australian Wealth Management sector, including the emergence of new technologies and a shift from support to value generation enabled by technology.
“Advice is progressively becoming the wealth management industry’s core offering. The pandemic merely accelerated this trend,” the report stated. “New technology is creating opportunities to engage with current and new clients in a more scalable way, regardless of the size of a client’s personal wealth. This is broadening the market to include underserved less affluent segments, who have an increasing need and demand for affordable advice. All three big markets are generally at different stages of evolution on this growth continuum,” - Accenture.
The Australian Wealth Management Industry as we know it is changing, and it is changing fast.
The power has shifted, well and truly from the provider to the consumer, with generational change and technology being the driving force of a new order in next-generation platforms, products, services, and advice.
Only by recognising and preparing for the new world order can Australian Wealth Management providers be assured of future business success.
To learn more about the Marketing, Communications, and Sales roles within the Financial Services sector please fill in the below form and download our NEW Financial Services Salary Guide & Market Trends Report Australia 2021.