Structures and service providers
The study found that wealth managers are planning to digitalise their capabilities and are looking to new technologies to develop their offering further. 87 per cent of wealth managers have added new technologies for clients to use within the last three years, with 90 per cent suggesting they will in the next two years.
Cost efficiency is high on the priority list, with many respondents citing fee compression: 46 per cent say that charges to wealth clients for the same or similar services have decreased in the last three years, with just nine per cent suggesting they have increased. Wealth managers are seeking to defend fee levels, in part through the introduction of new investment strategies described above, but are also seeking ways to save money.
In this regard, 57 per cent of wealth managers state that fees paid to external fund managers have fallen, as a percentage of assets outsourced to external fund managers, with only 9 per cent noting rise. The study also identifies a trend in favour of outsourcing more investment management to external asset managers—a shift which can help to support improved cost efficiency as well as adding differentiated investment capability
There is also a modest trend towards managing assets in collective vehicles. 34 per cent (including half of firms with more than $5 billion in wealth assets) have a higher proportion of assets in collective vehicles than they did 3 years ago, while only 14 per cent have less.
Kathryn Saklatvala, Senior Director and Head of Investment Content at bfinance, said: “It’s fantastic to see the breadth of investment capability that many wealth managers are now able to offer to clients—the results of this survey show a significantly higher usage of strategies such as private equity, infrastructure, private credit and hedge funds than we’ve seen in other studies, and far more widespread integration of ESG factors into investment. These capabilities have clearly evolved a great deal in recent years, supported by the development of in-house teams and the growing use of external asset managers. Wealth managers are under real pressure to create high-value, differentiated product offerings as well as find new scale-driven efficiencies that can support profitability— the market is increasingly competitive, and this report highlights significant downward movement in fees. Perhaps the most widespread current trend among wealth managers is the introduction of new technologies: we are watching with interest to see whether digitisation can help to deliver the magic combination of scalability and true personalisation that many of these firms seek to achieve.”
