2025 is shaping up to be a busy year for the wealth management industry, says Tara Gillespie, Head of Global Assets at Redington, as she highlights some of the key areas identified for change.
With the continued shift towards outsourcing, new technology advancements and an ever-evolving regulatory landscape, firms must keep up with the pace of change to continue managing portfolios effectively and deliver excellent client service.
But where exactly are the leading wealth managers focussing their attention? We recently sat down with a group of close contacts to find out.
The outsourcing boom
The shift towards outsourced solutions has been steadily gaining momentum among financial planning firms, particularly those with less capacity and fewer resources for chasing benchmark-beating returns.
While by no means a new development, this fundamental shift in the way the wealth management industry operates means the leading players are now acutely aware of the need to understand – and showcase – their value-add within the chain. Often, this is coming down to performance, risk management and cost.
The need for competitive edge becomes even more pertinent with a small group of MPS and model providers leading the charge, something which also brings about concerns for what a potential “clustering effect” could mean for client outcomes.
What such an effect could mean remains to be seen, but the firms we engaged with certainly see an opportunity to hone their “edge” and differentiate from this broad market trend.
Sustainability’s ‘coming of age’
Sustainable investment has had a tough time lately [SW1] – both reputationally and in terms of performance – but the leading players remain excited about its long-term prospects.
The view from our panel is that if sustainable investing is to become fully mainstream, then it needs to meet expectations from a long-term performance standpoint. And this means broadening scope.
The wider industry has a big role to play in facilitating this. For example, the private market sphere is ripe with opportunities for investors to support real world solutions to sustainability challenges, without any return concessions. This needs coordinated action across asset managers and platforms. Closer to home, within the public markets, there is heightened focus on effective stewardship to have real world impact on company behaviour, in a way that supports good business decisions and long-term returns. Asset managers need to be apolitical and take their role in this seriously.
Regulation is seen as having an equally important role. However, while the firms we spoke with were supportive of recent regulations – such as SDR – there are concerns about things becoming too prescriptive.
In particular, there were worries about the extension of SDR to cover bespoke services bringing certain challenges. While it’ll be slightly easier for MPS providers with existing products, larger firms offering services of a bespoke nature are mindful of the bigger hill they’ll have to climb.
The evolving role of technology and AI
The other major focus for the wealth leaders is staying abreast of advancements in AI and technology. In particular, how these can be deployed to drive up client outcomes and service.
First and foremost, firms are looking at how they can drive greater personalisation in a post-Consumer Duty world. [SW2] With many wealth management firms telling us they now employ teams of data analysts to comb through client data and apply this to drive improved communication, marketing and products, the message is clear: if you’re not using tech to improve service, then your competitors most certainly will be.
So, what?
There is increasing cost pressure on businesses and propositions which is influencing decisions within portfolios (i.e. move to passive) and businesses (i.e. outsourcing). This creates real opportunity for wealth managers with the resource and bandwidth to stand out from the crowd and differentiate. Opportunities to differentiate could be in accessing new investment solutions in private markets and investing in real world solutions to sustainability challenges – where attractive returns and impact intersect.
There’s no question that the firms that embrace new tech developments will be best positioned to “win” – reducing friction in the business and allowing greater focus on the actions and decisions that make the biggest difference to client service and outcomes.
About Tara Gillespie
Tara is an experienced investment adviser, supporting large investors across portfolio construction, risk and sustainability. She leads Redington’s Global Assets advisory team, responsible for the investment advice delivered to wealth managers, endowments, charities and insurance companies as well as the people, proposition and strategy for those business lines. Tara has 12 years’ experience advising large institutional investors on solving complex investment challenges, across asset allocation, sustainable investment, risk management and governance. Separately to her role at Redington, Tara is a Trustee for the 1851 Trust and sits on the Investment Committee of The Big Exchange. Tara holds a First Class BSc in Biochemistry from Imperial College London and has passed all three CFA levels.
