10. RESERVATIONS AROUND CLOUD DEPLOYMENTS SLOWLY EVAPORATE
AITE GROUP SAYS: "While for a lot of firms cloud-based solutions allow their IT infrastructure to be more efficient, for others these solutions are a way to boost innovation and bring in new digital engagement models in a scalable, cost-effective way. A Europe-focused wealth management executive survey carried out by Aite Group in Q3 2020 found that 26% of firms see cloud deployments as very important to them, while nearly 60% of firms state that it is important. Similarly, approximately 84% of firms indicate in the same survey that partnerships with third-party data providers is either very important or important to them. This clearly indicates a big opportunity."Thus, another lure of the cloud in 2021 will be the chance for wealth managers and private banks to rethink legacy applications as well as service offerings. Embracing the cloud can open up, for instance, the world of microservices for FIs, allowing them to build apps at speed based on changing and new customer requirements."
TOP 10 TRENDS IN WEALTH MANAGEMENT FOR 2021
1. GLOBAL WEALTH MANAGEMENT CONSOLIDATION HEIGHTENS
AITE GROUP SAYS: "Going forward, market consolidation will escalate to defend against flat to negative interest rates, saturated markets, fragile profitability, market fragmentation, competition, shrinking margin, bloated financial advisor compensation expenses, and so forth. The needs and synergies are becoming clearer and more tangible for opportunistic buyers and particularly vulnerable small- to mid-scale wealth managers whose revenue can't support their cost bases. The smallest businesses (i.e., those with assets under management [AUM] under US$1 billion and unusually high cost bases), will not be acquired—rather, those client relationships will be offloaded to acquirers via strategic revenue-sharing agreements with a finite lifetime. For other firms, their only way to survive will be to become acquired by a larger entity. Interestingly, certain acquisition targets are upgrading, or will upgrade, their technology stacks beforehand, to safeguard their client base and justify more appealing valuations."
2. ASSET MANAGERS USE DIRECT-TO-CONSUMER DISTRIBUTION
AITE GROUP SAYS: "Digitalization, AI, and algorithm-based investment management have increased the scalability of and access to financial planning and investment management. Offering digital advice presents a couple of opportunities for asset management firms. The first opportunity involves providing digital advice tools as a value-added service, enabling advisors to expand support to smaller-net-worth and next-generation clients, especially their clients' children and heirs, via wealth transfer. This provides an indirect distribution channel and another touch point with advisors who can lead to greater use of asset management firms' investment solutions. However, it's unclear how many advisors will actually leverage these robo-tools, and integration with the advisor's workflow will be a critical component. The direct-to-consumer distribution may present a longer-term opportunity for asset management firms that could help offset the impact of growing disintermediation, limited access, and influence through the traditional advisor market."
3. ESG INVESTING EXTENDS REACH TO THEMATIC AND IMPACT GOALS
AITE GROUP SAYS: "The wealth management industry is in a unique and special position to shift the focus of private and public investments toward more sustainable businesses and technologies, and global wealth managers are beginning to capitalize on their role to deploy private client investment toward certain themes. Climate change/carbon emissions, sustainable natural resources/agriculture, and corporate board issues are top of mind in 2021. Therefore, FIs (global financial institutions) will engage more with asset managers whose portfolios' underlying securities generate lower percentages of their revenue from thermal coal production, that contribute to the development of sustainable natural resources, and whose boards are diverse."Furthermore, new partnerships with leading ESG data providers will be cemented, and an expanded scope of analysis and coverage across asset classes, including listed alternatives, will begin to proliferate. Leading data vendors will actively push ESG data onto advisors' workstations and strive to standardize it. With that, Aite Group sees tighter consolidation of ESG factors into investment selection."
4. ADVISORS PREPARE TO MANAGE WEALTH TRANSFER OPPORTUNITIES HOLISTICALLY
AITE GROUP SAYS: "Using philanthropy to better engage clients will be popular in 2021, especially for private banks. The two aspects that the pandemic has highlighted in the last year are the fragility of life and the importance of giving back. Several wealthy clients want to engage in wealth-transfer-related talks digitally and shape legacy-related plans earlier than expected due to the pandemic. At the same time, clients are more aware and interested in their philanthropic endeavors, which advisors must assist with in 2021. RMs (relationship managers) and advisors will do well to be more educated in the various aspects of philanthropy. Philanthropy can also play a crucial role in RMs engaging with the next generation of clients meaningfully. These prospective clients can be involved at a very young age through philanthropic projects, which helps RMs build a natural rapport with them and get to know them long before they can become clients. It affords an invaluable opportunity."Advertisement
5. THE FINANCIAL PLANNING PROCESS DISASSEMBLES
AITE GROUP SAYS: "Traditionally advisors have avoided multigoal comprehensive financial planning. This service can be time-consuming for both advisor and client, and is rarely directly compensated. Aite Group's 2019 U.S. financial advisor survey revealed that only one-third of an average advisor's clients have received a financial plan addressing more than three goals. This reality has sunk in with wealth management firms and financial planning software providers. Planning tools and processes are being broken down into more manageable components that can help advisors deliver the advice clients need at the right time. The traditional approach of requiring clients to follow a set monolithic financial planning path starting with a multipage client discovery questionnaire is being put to the side in favor of a more client-centric and dynamic approach to serving clients."
6. FIRMS FOCUS ON PROSPECTING AND THE RISE OF SOCIAL SELLING
AITE GROUP SAYS: "Face-to-face or in-person meetings will still play a role in developing new clients, and advisors will continue to leverage video conferencing, email, and telephone, but Aite Group expects to see a rise in social selling. Social media is a dominant form of communication among consumers in their personal life and increasingly with their business interactions. Social selling is a focused approach to prospecting aimed at establishing rapport and relationships with prospective clients. Social selling is highly customized and personalized for each prospect; it's more conversational/interactive and can supplement and/or complement phone, video, and in-person engagements."
7. PRESSURE TO REORGANIZE FINANCIAL ADVISOR COMPENSATION MODELS INTENSIFIES
AITE GROUP SAYS: "The pandemic, volatile capital markets, increasing regulation, and the demand for advice are creating numerous challenges and opportunities for FIs and financial advisors across the globe. One key piece to the puzzle is global financial advisor compensation models. Indeed, the catchphrase "follow the money" is vital to appreciate the need to keep the advisor community well-compensated, in line with regulations, and migrating toward fiduciary nirvana, regardless of the infiltration of digital channels and platforms. While technology, digitalization, training, and practice management will help retool the financial advisors, revised compensation models will play a role in changing the advisors' behaviors and focusing their efforts to meet client needs.:
8. EFFICIENT CLIENT ONBOARDING TAKES CENTER STAGE
AITE GROUP SAYS: "Aite Group's July 2020 global wealth management executive survey revealed that approximately 30% of respondents reported negative or very negative business performance impacts caused by lags in operational efficacy matters, such as new account opening. While the end-to-end digitization of the wealthy client's financial journey, including onboarding, may not be the goal for many wealth managers and private banks, it is essential for FIs to furnish the wealthy client's entire financial life cycle with digital touch points—particularly at a time when keeping physical distances continues to be the norm. And the right tone must be set from the very start to prevent complications down the line."
9. ANALYTICS ENHANCE SALES AND SERVICE
AITE GROUP SAYS: "Wealth management firms have spent the last five to 10 years improving their client data and the last few applying analytical models to address various sales and service use cases. Some of these models have matured and are now powering communications and enhancing service activities. At the same time, the pandemic is accelerating the need for advisors and firms to get to know clients in a digital environment. Analytics-based solutions that can help with client acquisition and relationship development in the virtual realm will be in strong demand in 2021 across firm types and wealth segments."Advertisement
10. RESERVATIONS AROUND CLOUD DEPLOYMENTS SLOWLY EVAPORATE
AITE GROUP SAYS: "While for a lot of firms cloud-based solutions allow their IT infrastructure to be more efficient, for others these solutions are a way to boost innovation and bring in new digital engagement models in a scalable, cost-effective way. A Europe-focused wealth management executive survey carried out by Aite Group in Q3 2020 found that 26% of firms see cloud deployments as very important to them, while nearly 60% of firms state that it is important. Similarly, approximately 84% of firms indicate in the same survey that partnerships with third-party data providers is either very important or important to them. This clearly indicates a big opportunity."Thus, another lure of the cloud in 2021 will be the chance for wealth managers and private banks to rethink legacy applications as well as service offerings. Embracing the cloud can open up, for instance, the world of microservices for FIs, allowing them to build apps at speed based on changing and new customer requirements."
TOP 10 TRENDS IN WEALTH MANAGEMENT FOR 2021
1. GLOBAL WEALTH MANAGEMENT CONSOLIDATION HEIGHTENS
AITE GROUP SAYS: "Going forward, market consolidation will escalate to defend against flat to negative interest rates, saturated markets, fragile profitability, market fragmentation, competition, shrinking margin, bloated financial advisor compensation expenses, and so forth. The needs and synergies are becoming clearer and more tangible for opportunistic buyers and particularly vulnerable small- to mid-scale wealth managers whose revenue can't support their cost bases. The smallest businesses (i.e., those with assets under management [AUM] under US$1 billion and unusually high cost bases), will not be acquired—rather, those client relationships will be offloaded to acquirers via strategic revenue-sharing agreements with a finite lifetime. For other firms, their only way to survive will be to become acquired by a larger entity. Interestingly, certain acquisition targets are upgrading, or will upgrade, their technology stacks beforehand, to safeguard their client base and justify more appealing valuations."2. ASSET MANAGERS USE DIRECT-TO-CONSUMER DISTRIBUTION
AITE GROUP SAYS: "Digitalization, AI, and algorithm-based investment management have increased the scalability of and access to financial planning and investment management. Offering digital advice presents a couple of opportunities for asset management firms. The first opportunity involves providing digital advice tools as a value-added service, enabling advisors to expand support to smaller-net-worth and next-generation clients, especially their clients' children and heirs, via wealth transfer. This provides an indirect distribution channel and another touch point with advisors who can lead to greater use of asset management firms' investment solutions. However, it's unclear how many advisors will actually leverage these robo-tools, and integration with the advisor's workflow will be a critical component. The direct-to-consumer distribution may present a longer-term opportunity for asset management firms that could help offset the impact of growing disintermediation, limited access, and influence through the traditional advisor market."3. ESG INVESTING EXTENDS REACH TO THEMATIC AND IMPACT GOALS
AITE GROUP SAYS: "The wealth management industry is in a unique and special position to shift the focus of private and public investments toward more sustainable businesses and technologies, and global wealth managers are beginning to capitalize on their role to deploy private client investment toward certain themes. Climate change/carbon emissions, sustainable natural resources/agriculture, and corporate board issues are top of mind in 2021. Therefore, FIs (global financial institutions) will engage more with asset managers whose portfolios' underlying securities generate lower percentages of their revenue from thermal coal production, that contribute to the development of sustainable natural resources, and whose boards are diverse."Furthermore, new partnerships with leading ESG data providers will be cemented, and an expanded scope of analysis and coverage across asset classes, including listed alternatives, will begin to proliferate. Leading data vendors will actively push ESG data onto advisors' workstations and strive to standardize it. With that, Aite Group sees tighter consolidation of ESG factors into investment selection."
4. ADVISORS PREPARE TO MANAGE WEALTH TRANSFER OPPORTUNITIES HOLISTICALLY
AITE GROUP SAYS: "Using philanthropy to better engage clients will be popular in 2021, especially for private banks. The two aspects that the pandemic has highlighted in the last year are the fragility of life and the importance of giving back. Several wealthy clients want to engage in wealth-transfer-related talks digitally and shape legacy-related plans earlier than expected due to the pandemic. At the same time, clients are more aware and interested in their philanthropic endeavors, which advisors must assist with in 2021. RMs (relationship managers) and advisors will do well to be more educated in the various aspects of philanthropy. Philanthropy can also play a crucial role in RMs engaging with the next generation of clients meaningfully. These prospective clients can be involved at a very young age through philanthropic projects, which helps RMs build a natural rapport with them and get to know them long before they can become clients. It affords an invaluable opportunity."Advertisement
5. THE FINANCIAL PLANNING PROCESS DISASSEMBLES
AITE GROUP SAYS: "Traditionally advisors have avoided multigoal comprehensive financial planning. This service can be time-consuming for both advisor and client, and is rarely directly compensated. Aite Group's 2019 U.S. financial advisor survey revealed that only one-third of an average advisor's clients have received a financial plan addressing more than three goals. This reality has sunk in with wealth management firms and financial planning software providers. Planning tools and processes are being broken down into more manageable components that can help advisors deliver the advice clients need at the right time. The traditional approach of requiring clients to follow a set monolithic financial planning path starting with a multipage client discovery questionnaire is being put to the side in favor of a more client-centric and dynamic approach to serving clients."6. FIRMS FOCUS ON PROSPECTING AND THE RISE OF SOCIAL SELLING
AITE GROUP SAYS: "Face-to-face or in-person meetings will still play a role in developing new clients, and advisors will continue to leverage video conferencing, email, and telephone, but Aite Group expects to see a rise in social selling. Social media is a dominant form of communication among consumers in their personal life and increasingly with their business interactions. Social selling is a focused approach to prospecting aimed at establishing rapport and relationships with prospective clients. Social selling is highly customized and personalized for each prospect; it's more conversational/interactive and can supplement and/or complement phone, video, and in-person engagements."7. PRESSURE TO REORGANIZE FINANCIAL ADVISOR COMPENSATION MODELS INTENSIFIES
AITE GROUP SAYS: "The pandemic, volatile capital markets, increasing regulation, and the demand for advice are creating numerous challenges and opportunities for FIs and financial advisors across the globe. One key piece to the puzzle is global financial advisor compensation models. Indeed, the catchphrase "follow the money" is vital to appreciate the need to keep the advisor community well-compensated, in line with regulations, and migrating toward fiduciary nirvana, regardless of the infiltration of digital channels and platforms. While technology, digitalization, training, and practice management will help retool the financial advisors, revised compensation models will play a role in changing the advisors' behaviors and focusing their efforts to meet client needs.:8. EFFICIENT CLIENT ONBOARDING TAKES CENTER STAGE
AITE GROUP SAYS: "Aite Group's July 2020 global wealth management executive survey revealed that approximately 30% of respondents reported negative or very negative business performance impacts caused by lags in operational efficacy matters, such as new account opening. While the end-to-end digitization of the wealthy client's financial journey, including onboarding, may not be the goal for many wealth managers and private banks, it is essential for FIs to furnish the wealthy client's entire financial life cycle with digital touch points—particularly at a time when keeping physical distances continues to be the norm. And the right tone must be set from the very start to prevent complications down the line."9. ANALYTICS ENHANCE SALES AND SERVICE
AITE GROUP SAYS: "Wealth management firms have spent the last five to 10 years improving their client data and the last few applying analytical models to address various sales and service use cases. Some of these models have matured and are now powering communications and enhancing service activities. At the same time, the pandemic is accelerating the need for advisors and firms to get to know clients in a digital environment. Analytics-based solutions that can help with client acquisition and relationship development in the virtual realm will be in strong demand in 2021 across firm types and wealth segments."Advertisement
10. RESERVATIONS AROUND CLOUD DEPLOYMENTS SLOWLY EVAPORATE
AITE GROUP SAYS: "While for a lot of firms cloud-based solutions allow their IT infrastructure to be more efficient, for others these solutions are a way to boost innovation and bring in new digital engagement models in a scalable, cost-effective way. A Europe-focused wealth management executive survey carried out by Aite Group in Q3 2020 found that 26% of firms see cloud deployments as very important to them, while nearly 60% of firms state that it is important. Similarly, approximately 84% of firms indicate in the same survey that partnerships with third-party data providers is either very important or important to them. This clearly indicates a big opportunity."Thus, another lure of the cloud in 2021 will be the chance for wealth managers and private banks to rethink legacy applications as well as service offerings. Embracing the cloud can open up, for instance, the world of microservices for FIs, allowing them to build apps at speed based on changing and new customer requirements."
As the COVID-19 pandemic played havoc with the economic realities of 2020, businesses adapted as quickly as they could by moving to remote work, contactless payment options, and online lending. According to Aite Group's top ten wealth management trends for 2021, firms should not think about saying goodbye to these changes just yet—and those that were slow to adjust may find themselves struggling to catch up. "Despite the approval of vaccines in late 2020, the first half of 2021 is still expected to continue much like 2020 ended," the report states, "with remote working, drastically reduced travel, and client interactions conducted almost exclusively on a virtual basis. "Firms should not be fooled into thinking about changes in operating posture as mere temporary workarounds, as much of them, while slightly modified, will persist post-pandemic," the report continues. "Time is of the essence for wealth management firms to embrace the new normal and invest in staff and infrastructure in order to keep up with client behavior and faster-moving competitors." Among other trends, Aite Group's researchers predict a rise in market consolidation and social selling, which the report says "is quickly becoming a critical area of expansion and point of differentiation for FIs [financial institutions] and financial advisors." See our slideshow for Aite Group's top ten trends in wealth management, as well as highlights from the report.
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Richard Binder
Richard Binder, based in New York, is part of the social media team at ALM. He is also a 2014 recipient of the ASPBE Award for Excellence in the Humorous/Fun Department.
