Technological advancements and digital revolution has resulted in increased number of DIY investments. More than 1/4th of the global HNW wealth is self-directed without the assistance of wealth managers.
Self-Directed Investors offers detailed analysis of the global landscape of HNWs. The findings of the report are based upon 2015 Global Wealth Managers Survey. The publication examines primary drivers in the self-directed investment market along with the key reasons behind the wealthy individuals’ decision for building their portfolios without any professional assistance. The wealth management industry’s competitive landscape and product environment is also included in the report. Additionally, the report also compares drivers for self-directed investments between emerging and developed economies.
The wealth management industry is set to reform under pressure from technological advancements, price-sensitive consumers and regulatory changes. Significant advances in digital technology has led to the advent of robo-advisors that offer automated investment solutions. Robo-advisors are based on the idea that the tasks performed by a human Registered Investment Advisor (RIA) can now be replicated by advanced software based on artificial intelligence. The USP of robo-advisors include lower costs and ease-of-use. Thus, young HNW individuals have showcased interest in robo-advisors instead of traditional wealth managers.
Moreover, there has been a rise in the first-generation entrepreneurs and HNW’s who believe in Do-It-Yourself investments. This is because a large number of HNWs belong to the emerging economies such as Asia-Pacific. In addition, the increasing popularity of ETF’s (Exchange-Traded Funds) and P2P (Peer-to-Peer) has started to affect the business of wealth managers. These platforms are seriously challenging the traditional brokerage business models while damaging the profitability of the wealth managers.
As a result, it has become imperative for wealth managers to focus on the needs of clients who tend to self-direct. Even though discretionary and advisory asset management services are more premium and profitable, there has been a decline in the number of HNWs who use these services. Research shows, execution-only mandates constitute 19.1% of total HNW assets held with wealth managers. Although clients in developing economies tend to prefer unadvised services, the US represents the biggest market opportunity in terms of self-invested assets.
The Global Wealth-Management Industry:
Wealth Management is one of the most appealing and growing sectors within the financial services industry. There are two primary reasons behind the same. Firstly, wealth management businesses have opened up as lucrative business options that have great growth prospects and lower need for initial investments. Thus, financial firms that have reached maturity and are facing difficulties in recording growth have turned towards wealth management as a new avenue for earning higher returns and profitability. Secondly, wealth management services have now become essential for attracting and retaining retails customers over a long period of time.
Some of the trends governing the wealth management industry:
• New generation of visionary investors
• Digital revolution
• Advent of automated investment services through robo-advisors
• Challenging investment environment that requires diversification
• Shifting demographics and age of the investors
Key Topics Covered in the Report:
– The global landscape of self-directed investments
– Global drivers for self-directed investment
– Competitive landscape of the wealth management industry
– Detailed profiles of leading players
– Detailed product environment in the self-directed market