What do wealthy families want from their wealth managers? Why does social investing make financial sense? What investment trends are we expecting post-pandemic?
A Trend towards Conscientious Investment
Wealth has been growing, exponentially for decades. In 2019 there was an increase of 11% in the number of HNWIs globally, the majority of which were in the US and Canada. In Europe the HNWI population grew by circa 9%, with Asia following closely at approximately 8%.
Whilst these are impressive rates of growth, since the start of 2020 the world has been faced with an unprecedented crisis, one we are still battling – Covid19.
In the first two months since the outset of this pandemic, there were losses of almost US$ 20 trillion wiped off global markets.
Notably there has also been a change in the focus of investments towards socially conscious initiatives. In fact, in recent months over 40% of UHNWIs have been expressing their interest in investing into sustainable enterprises and according to Capgemini it is estimated that 46% will do so by the end of 2021.
This trend though is not motivated by purely altruistic reasons, rather by the fact that sustainable investing offers less speculative risks and considerably higher returns.
Wealth managers have caught on and now 4/5 offer sustainable/impact investing options and solutions to discerning HNWIS.
So, who exactly is a wealth manager and what is the importance of hiring one?
A wealth manager is a trusted professional one can work with to help manage the complexities of one’s own finances. At times – referred to as wealth or financial advisors they tend to operate as a financial planner but their role has developed to encompass a much broader spectrum.
Wealth managers can support rich families, successful millennial entrepreneurs and business owners by giving them the peace of mind that their wealth is safeguarded. They offer valuable insight on lucrative investments and provide quintessential decision making surrounding their clients’ wealth.
Read more: Why do Asset Managers matter to the wealth industry?
Why is a Wealth Manager of value for HNWIs
The knowledge wealth managers possess in investment, their insight and access to an array of opportunities globally enables them to carve out a viable investment plan for their clients. They offer advice on investment options, digest insurance plans and scrutinize each opportunity looking out for risks and threats.
Wealth managers keep their clients informed on the latest regulatory developments that may affect their financial decisions and assets, protecting their wealth as a result.
The advice they provide enables HNWIs to grow their wealth and maintain a healthy investment portfolio. It allows them to enjoy a steady growth in their wealth that is also future-proof against market fluctuations and socioeconomic turmoil. Time-starved entrepreneurs and business owners especially, benefit greatly from wealth management firms’ expertise and time-savings by efficiently and professionally overseeing their assets.
Capgemini’s latest statements suggest that these volatile times have also prompted HNWIs to reconsider their existing arrangements with wealth management firms. Almost 50% are keen to change their current wealth managers.
When assessing whether a wealth manager is the right fit a few key questions to consider are;
- Are their frameworks and check in place to ensure that they are working in your/your family’s best interest?
- Does their wealth management philosophy align with your own?
- Are they able to offer flexible and customized solutions for your particular circumstances?
- Are they using the latest technology and/or AI to achieve results?
Growing Demand for Wealth Management 2.0
After the dust settles from this current crisis, the demand for wealth management will soar. But not traditional, box-thinking, high management fee, plain-vanilla investment strategy and bureaucratic wealth management.
No, today’s affluent, wealthy millennials and young heirs to global empires are seeking performance-based fees, customized solutions, technologically advanced AI solutions that provide flexible wealth management. More boutique – less corporation and ideally a wealth management firm that has grown a conscious – or even better – an inkling for green or societal initiatives.
