Who Are the Winners in the New Reality of Wealth Management

Several months ago, we were sure that the epidemic would calm down after summer. The reality has surprised us again: the situation varies from one region to another, but one thing is certain. COVID-19 is still affecting the global financial markets.

However, this impact hasn’t been predictable. Financial analysts around the world has been modelling the markets to prepare for what’s next, but most of their forecasts were unsuccessful. Looking back, it’s just to say that each month brought something new, and changes have become an inherent part of business.

Now, it’s time for a reality check: to understand what has changed since the beginning of the epidemic, and how we can become more change-resilient in the upcoming months.

To do that, we talked to several dozen Swiss Wealth Managers including our clients and partners. We summarized these talks in our latest publication Technology as Vaccine: How COVID-19 Impacts Wealth Management. Here are the most important findings.

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Earthquakes in Daily Operations

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When lockdowns started, wealth managers needed to change the way they work. Advisors had to switch from face-to-face meetings that dominated in our industry to digital communication channels. Also, as the situation was uncertain, their clients asked for more updates, so the frequency of interactions rose.

Overall, since the beginning of the epidemic, almost 90% of our respondents have experienced disruptions in their daily operations. Moreover, due to the general uncertainty, the importance of wealth managers in the eyes of investors has much grown.

Competitive pressure, tougher regulation, demanding clients and now COVID-19. WM margins are increasingly being squeezed. Clearly, the winners will be the WMs who adopt innovative technologies today.

William Bonhôte, author of the report

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Ultra-Volatile Financial Markets

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The epidemic, seen by many as a black swan, provoked a shock on financial markets. Between February and March, wealth managers observed an aggregated drop of 15% in the value of their AUM. However, surprisingly, they quickly rebounced to reach the pre-epidemic level in summer.  

Some wealth managers reported a problem of rash investment decisions of their clients. However, it didn’t affect that much those using electronic Portfolio Management Software and similar digital systems. Technology allowed them to give their clients a clear overview of their situation and calm them down.

Technology as a Vaccine

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COVID-19 has accelerated the digital transformation of many wealth managers. Some initiatives, previously run as side projects, have become top priorities. Without them, asset managers wouldn’t be able to switch to the online mode seamlessly.

While 62% of our respondents confirmed that they needed to continue their ongoing digital projects, 15% of them said that they had to undertake completely new initiatives to adapt to the new reality.

Wealth managers expect new digital innovations to be driven primarily by the fintech sector. They perceive ever more value in solutions such as Portfolio Management Software or processes automation. Thay also mention electronic documents delivery as a huge improvement in how they do their business. At WealthArc, we’ve already observed an increase in the demand for such services.

The Future of Wealth Management Has Already Come

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COVID-19 has been a catalyst of the changes that would otherwise happen in years from now. Adapting to the new wealth management reality has been an absolute must for professionals wishing to keep their position in the volatile and uncertain financial reality.

If you’re curious what our respondents predict for the following weeks as well as read a more detailed analysis of the past months, download our latest report Technology as Vaccine: How COVID-19 Impacts Wealth Management.

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