LSEG (London Stock Exchange Group), a global financial markets infrastructure and data provider, releases a report, The Future of Wealth: Why Consistency Matters, highlighting the impact of Artificial Intelligence (AI) in wealth management.
AI continues to transform the wealth management sector with 62% of wealth management firms stating that it will significantly enhance their existing operations.
This will need to meet the expectations of more than two thirds (68%) of investors who expect their digital experiences to match those of major tech firms.
Wealth management companies pointed to a range of benefits that an AI-powered approach offers, such as improved automation as well as speed, a reduction in manual errors, cost-effectiveness and additional enhancements.
AI also appealed to investors significantly, promising constant connectivity, ease-of-use, cross-device access and lower costs.
But the report revealed that AI on its own might not serve as the final product; rather, it enhances the role of advisors and functions as a tool for capacity building.
Trust remains vital to the advisory role. When questioned about was the greatest value that advisors could bring in the next three years, nearly half (45%) of investors who currently use an advisor, and 51% of those who do not, think the main value of an advisor in the next three years is in offering valuable investment advice.
Around a third of all investors also valued equally how advisors “help to 1) holistically meet financial and life goals, 2) provide innovative investment ideas approaches and opportunities and 3) are available when needed, especially in difficult situations.”
The report indicates that a hybrid advisory model, bringing together human expertise with AI, will become the standard.
Investors are generally open to AI being used in their investment journey, most notably for researching financial products and services (over 90%) and supporting advisors in portfolio management (over 80%).
In addition to these insights, the report identifies various areas where wealth management firms need to address evolving investor expectations.
These include:
- Omnichannel Experiences – Investors are increasingly expecting omnichannel experiences, with 46% of investors accessing accounts via mobile apps, wealth management firms need to enhance mobile and digital interactions. 35% of millennials and 34% of Baby Boomers seriously consider a wealth manager’s digital capabilities when choosing a provider.
- Filling Data Gaps – Addressing knowledge gaps, particularly in sustainable investing, can offer wealth managers a competitive edge. Over half (52%) of investors who do not use an advisor, cited a “lack of knowledge about sustainable investing”, when queried about barriers in the sustainable investment space.
- Cost-Effectiveness – Ultimately, the bottom line was an important consideration, with almost two thirds (64%) of all investors seeking more cost-effective solutions, including lower fees and simpler fee structures. Despite this, over half of all investors (51%) also indicated their willingness to pay a premium for financial advice during periods of perceived volatility and/or complexity, indicating the tangible value of financial advice.
The report coincides with the launch of LSEG’s integrated Wealth Advisor Dashboard on its Workspace platform designed to assist wealth managers in taking advantage of emerging wealth trends.
The Wealth Advisor Dashboard is a suite of workflow capabilities and tools available on the Workspace platform.
This tool is part of the LSEG Workspace ecosystem and is meant to help advisors deliver consistent, data-driven insights and improve client interactions.
Research Methodology
The report was conducted in collaboration with global research firm, ThoughtLab.
The research included a global survey of 2,000 investors globally across different wealth levels, ages, lifestyles, occupations, gender, along with other key characteristics.
The research study also included a benchmarking survey of senior executives from a cross section of 250 wealth management firms, from independent wealth advisors and private banks to wealth management divisions within regional and international banks.
The research covered four regions – Asia Pacific, Europe, the Middle East, and North America – and was conducted by:
- Wealth level: the largest shares comprised mass affluent (25%) and high net worth (25%), followed by very high net worth (18%).
- Age: the largest share consisted of Gen X (31%), followed by Baby Boomers (30%).
