The Transition in Wealth Management- New Investors Fostering New Ways for Wealth Management

On two fronts, wealth management faces significant distributions: digital change, and customer experience. Understanding client demographics and expectations is critical to succeeding in these turbulent times.

The global capital market is facing a new climate that is regulated by economic blow, inflation, recession, and rapid advancement in technology that has changed the wealth management industry. This has affected the way wealth management company strategize, invest, and operate. The wealth management industry is in the middle of a new period, where new generations of retail investors are entering. The financial advisors of wealth management companies and investor retailers both play co-related roles in the capital market ecosystem. Every year, new-age investors are increasing in number, they have many specialized investment needs. Retail investors are going through different phases of life, including housing investment, funding a child’s education, and planning retirement. Financial advisors should design a wealth management portfolio that focuses on serving investors’ interest in a better way, something that strengthens their present and support their future. Today many people are proactively making intelligent investment choices, however, there is a huge share of the population yet to participate in the capital market but they lack knowledge of best practices and are in dire need of targeted advice. On receiving more personalized investment guidance, around 34% of retail investors in the world would be more confident in their financial choices. All the factors are very challenging for the wealth management industry but also give them an area to nurture a safe and reliable investing ecosystem.

What is Wealth Management

Wealth management is the process of consulting individuals, families, or companies for managing their assets and investments to burgeon their wealth and achieve specific financial goals. The approach of wealth management includes investment advisory services, financial planning, and other financial strategies to preserve or grow wealth over the long term. However, over the last few years, there has been a major overhaul in wealth management and it has become necessary for financial advisors to adopt and tweak their business around this change.

Factors Influencing the Patterns of wealth management

  • New Generation Investors- The new generation investors include Gen Z and also baby boomers following the path of young peers. These new retail investors have different needs, thinking patterns, and expectations. They demand new ways to communicate with their investors and stay in touch with them. The new generation does not want to be part of a fixed segment instead they establish themselves as unique individuals with specific preferences and objectives. Few of the prime demands of new-generation investors from wealth management companies are a priority to their uniqueness, multiple advisor’s opinions, first-class investors, and digital and personal interaction.
  • AI & ML Integration- Technology has certainly transformed the nature and delivery of financial assistance. More and more companies have started to implement the use of artificial intelligence and machine learning. Around 62% of investors working at wealth management firms all across the world expected to raise their expenditure on emerging technologies over the next year. The technology integration has enabled the fusion of science and human and presented the robo advisory in the industry.
  • Democratization of Financial Advisors- The aftermath of the financial crisis's low yield environment has led to higher anticipation among retail investors to get access to high-return asset classes and strategies as richer, institutional investors. In the last five years, several start-up firms have joined the market to cater to this demand for income and access to exceptional investing solutions that were previously only available to commercial or rich clients.
  • New Competition- The wealth management industry is facing fierce competition from merging new firms, new investment schemes from retail banks, and new business patterns. For instance, the collaboration of private banks with brokerage firms has broadened the spectrum of banking and lending capabilities. On the other hand, digitally aided finance startups, affluent asset managers becoming retail investors, and a growing range of financial advisers with Independent Registered Investment Advisors (RIAs) are gaining huge traction.
  • Ageing Advisors- With the change of asset owners, the advisors are also changing. Many employees of wealth management companies are reaching their retirement age and thus new advisors are entering the market. They come with new business patterns and fresh advice, which significantly impact the sector. To sustain present service levels, the WM industry in the United States is projected to recruit and educate roughly new 240,000 advisors.
  • New Investment Environment- In a time of inflation followed by the recession has emerged a need different investment approach. The investment environment has to re-calibrate the new means for getting profitable returns, as it includes our very own old gold, defensive stocks, bonds, and cash.
  • Data Analytics- Everyday world generates a huge amount of data, earlier this data was discarded but recently the world has realized the importance of big data. The new clientele has pushed firms to use structured and unstructured data to make better investment decisions. Moreover, the use of generated data can also help in finding irregular patterns and provide cyber security. While the majority of WM organizations currently rely on very rudimentary analytics based on MIS and review systems to give crucial business insights. Moreover, many are now investing in developing more powerful analytics and data management solutions. Big data are used by companies for different types of analytics, such as algorithmic, predictive, descriptive, and reporting & MIS.

New Approaches Taken by Advisors

The world is yet to witness the full potential of new investment schemes, in the meantime financial advisors have started leveraging digital marketing strategies for wealth management. Additionally, it has been proven to be used in different below-given ways to increase the clientele:

  • CONTENT MARKETING: Advisors are focusing their reach on the target audience instead of targeting the masses. The content is been curated in a way that helps understand the customer, and why their services are important for the client’s personal need. It helps in the generating internet and building trust among young consumers whose primary demand is personalization.
  • SOCIAL MEDIA MARKETING: Social media marketing is like handing a billboard in a consumer’s hand. In times when the world is undergoing digital transformation, social media is a great marketing tool for appealing to potential new clients. There are compliance rules set by FINRA and SEC to prevent gimmicky practices. The advisors using social media platform has outperformed around 72% of non-users.
  • PODCASTS: Podcasts are no longer the source of listening to interesting stories, as it has also become popular in the finance sector. Podcasts are an important part of financial adviser marketing. A podcast is an excellent way to create trust with both current and future clients by sharing your knowledge and skills. Consumers get the impression that you're speaking directly to them while they're on the run or doing daily chores.


So far, there were some innovations and factors that are seen to dominate the wealth management industry. Companies are finding new opportunities around operations, investing, client servicing, and technology to capitalize on these major changes for the benefit of both investors and advisors. Fresh advice and new methods for offering that advice will continue to emerge, and some competitive positions are going to disappear while others strengthen, resulting in the progression of winners across the industry. Moreover, shifting demographics, such as advisor aging and the future passing down of wealth from baby boomers to their children have disrupted many longstanding client relationships and created chances for new businesses to expand their market share However, the ongoing struggle against inflation and volatile markets will continue to have significant consequences on wealth managers' business. Additionally, increasing rules and regulations, emerging startups and company models, and new competition patterns all contribute to the wealth management sector's current state of chaos.

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