How will you reframe the future of advice if today’s client is changing? (2024)

The journey to the future of advice will be shaped by ongoing developments, such as automation, sustainable finance and the growing use of digital platforms. Looking further ahead, WPBs will harness emerging innovations to strengthen their offering, using a synergetic blend of advisors and technology to put wealth planning at the core of advice.

Future advice models will be shaped by four strategic themes. Each will reinforce and strengthen the others, leading to surprisingly rapid change. The new paradigms for advice that emerge from this process will also be underpinned by clear value creation. EY research suggests thatWPBs can build loyalty and revenueby demonstrating clear links between the fees and data that clients provide, and the service and value that they receive in return.

1. The disruption of current client expectations

WPBs want to move beyond wealth-based segmentation and build richer client understanding. Smarter approaches to segmentation include detailed persona frameworks and the use of professional profiles or psychographic “personality portraits.”

Looking ahead, firms must ensure their segmentation models can adapt as clients’ lives evolve. Understanding investment goals, ethical beliefs and digital appetite is key to optimizing client engagement. Results can be surprising. For example, EY research shows that clients seeking financial education are among the keenest digital adopters and that European clients are more open to digital channels than those in North America (see Figure 1).

2. The democratization of advice

The biggest disruption to WPB models over the next few years will come from growing demand for sophisticated products and services in the fast-growing mass affluent and high net worth (HNW) segments (see Figure 2).1Key growth areas are likely to include:

• Direct indexing instead of standardized mutual or ETF funds
• Private assets in addition to listed investments or publicly available funds
• Fractional ownershipthat lets investors own a part of a security or financial asset
• Tokenization that provides tradable access to private markets and physical assets

On the product side, WPBs will need to strengthen their investment offering, provide the necessary advice and suitability checks across a larger investor group and develop the associated digital delivery capabilities.On the service side, firms will increasingly seek to put holistic wealth planning, centered on clients’ lives, at the core of their activities. Integrating education into client journeys in a coherent way will be vital.

3. The integration of people and digital technology

The majority of wealthy clients plan to access more advice through digital tools in the future.2This provides an opportunity for firms to improve efficiency and satisfaction at the same time by scaling up automated, client-led advice. Even so, human advisors will remain vital to almost all wealth models.

The growing ubiquity of hybrid models means that getting them right will be critical to future success. The key challenge will be to seamlessly blend human contact with automated interactions. Providing smooth, high-value omnichannel advice in real time – especially when working cross-border or with mobile clients – will be difficult.

The ultimate solution is to provide a synergetic blend of people and technology. The future of advice will see WPBs develop platforms that incorporate sophisticated digital assistants alongside tech-enabled remote advisors. The effect will be to transform advisor performance and client satisfaction while lowering cost to serve.

4. The use of data and technology in advice generation

The WPB industry has made significant strides in digitizing the delivery of advice, but there is huge untapped potential to bring data and technology to bear on the generation of advice itself. Digital investment tools are viewed positively by the wealthy, especially in Asia-Pacific and among millennial clients (see Figure 3).

Fast-growing pools of client data, combined with rapid advances in AI, offer the potential for firms to begin generating insight-rich advice automatically. This then can be shared digitally or used to enhance advisor interactions – counteracting the risk of depersonalization. Over time, the predictive capabilities of advanced analytics will help WPBs to plan client journeys and anticipate their needs.

Harnessing the power of personal data will be critical. Investors are willing to share their data, but WPBs need to show a clear return-on-data if they are to encourage active disclosure. That might involve explaining how data is used and demonstrating links between data, advice and value. The need to maintain trust suggests that even automated advice engines will need to retain some human input, for example by subjecting AI-driven advice to a human sense check.

WPBs can’t deliver the future of advice immediately, but they can act now to take advantage of emerging developments and lay foundations for the future.

Imperative one: identify a future model that will deliver ever-improving client experiences

This model should encompassfour key elements (see Figure 4), building on current improvements to achieve wholesale transformation:

• Strategic framework ̶a robust framework should set out a compelling vision for the future, a clear strategy to achieve it and a business case for change. WPBs can use rigorous design principles to translate their chosen approach into operating rules for future models. International firms should give particular thought to meetinglocal regulatory and customer requirements while providing seamless experiences to cross-border clients.
• Ecosystem compatibility and flexibility ̶ identifying how WPBs will interact with partner networks will become vital. That requires firms to identify their chosen role within financial ecosystems and to create a technology stack flexible enough to handle continuous change and integrate FinTech innovations into operating models.
• Service architecture ̶WPBs can use their plans for strategy and technology to identify the infrastructure required to deliver the future of advice. Firms should factor the roles and capabilities of external partners into their service architectures.
• Regulatory compliance̶WPBs need to identify the regulatory requirements of target client experiences, defining the elements that must be fulfilled at every stage of implementation. This will be particularly challenging for WPBs with highly mobile clients or frequent cross-border interactions.

Imperative two: make the investments needed to achieve the desired model

WPB technology will be a leading area of focus. On average, nearly two-thirds of WPBs plan to increase their digital investments over the next three years.3The majority of spending will continue to flow to client experience initiatives, but other drivers include the need to integrate platforms and to support greater product diversity.

The importance of experienced talent – both for relationship management and technological innovation – represents another crucial area of investment. Talent is critical to the industry’s ability to renew advice models and deliver a step-change in experiences.

WPBswill also face huge execution challenges as they invest in new advice paradigms. The need to navigate multiple markets and regulatory regimes means that executing through complexity and across regions poses a particular difficulty for international firms.

Imperative three: match efforts to invest in technology and talent with establishing the right culture and mindset

Suitable advisor training, close engagement between business units and developers and clear communication from leaders are vital to achieving change. Maintaining organizational agility and flexibility is a particularly important priority, and one that is often underappreciated.

Flexibility is vital if firms are to adapt to changing client expectations, new products and services, evolving digital technology and developing sustainability criteria. It is also crucial to effective collaboration and partnering. After all, delivering the future of advice will be a continuing project, not a one-off exercise.

Wealth advice is evolving – firms must adapt or risk being left behind

WPBs need to develop a vision for the future of advice that will excite clients and employees and create value for all stakeholders. They must also decide how their delivery of this new paradigm will fit into an increasingly rich industry ecosystem.

Firms should then design their desired target model and set out a route map for investment and transformation that will allow them to achieve it. Key challenges will include building clear links between data, trust, value and fees; the need for flexibility and collaboration; and executing across borders and industry silos.

The future of WPB will be very different from the past. If they are to remain relevant, firms must act now and start moving toward radically altered models for advice.

Summary

The future of advice will be very different from the past. Now is the time for wealth and private banks to act. Moving toward new paradigms for advice will strengthen firms’ relevance to clients and their ability to create value for all stakeholders.