Rising need for Wealth Management Services is expected to Fuel the Wealth Management Market
Global Wealth Management market size was valued at USD 1641.88 billion in 2021, and it is expected to reach a value of USD 1823.21 billion by 2028, at a CAGR of 7.5% over the forecast period (2022–2028).
Westford USA, Jan. 16, 2023 (GLOBE NEWSWIRE) — SkyQuest’s analysis of the Wealth Management market provides valuable insights. The industry is currently in a growth phase, with sales increasing at a rate of 7.5% per year. However, there is potential for further growth, particularly in the premium segment of the market. One of the key drivers is that the global virtualization security market is experiencing significant growth due to technological advancements in wealth management products and services. Furthermore, the growing emphasis of wealth management service providers on hybrid advisory is expected to open up lucrative opportunities for market growth during the forecast period. However, the lack of pricing transparency and high competition in fees for wealth management products and services are likely to stifle market growth.
Another growth is the increased use of advanced technologies such as bots, IoT, AI, and big data analytics has contributed to the growth of the wealth management market. Furthermore, as digitalization increases, wealth management providers are looking to quickly invest in engagement by providing digital and vocal style assistants. Furthermore, chatbots, which are software applications that are used to conduct an online chat conversation, are widely used by wealth management firms because they provide a more personalized and user-friendly experience than mobile applications.
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SkyQuest recommends players invest in big data analytics capabilities in order to generate insights that can be used to improve and refine service offerings and thus increase revenue
According to SkyQuest analysis, we found that the manufacturers in the global Wealth Management market will benefit from potential opportunities for expansion in the coming years as global demand for Wealth Management services rises. In order to gain revenue benefits, key players in the Wealth Management market are concentrating on expanding and improving their service portfolio by understanding the customer buying behavior and spending towards various wealth management services. Big data solutions are being implemented to provide insights into client segments, product penetration, and the effectiveness of training programs. These innovations are being used to assess existing and potential clients’ desire to purchase various services and products offered by a wealth management firm, their lifetime value, investment pattern, and risk tolerance. They also help wealth management firms track business performance, improve client acquisition and retention rates, boost sales, and provide real-time investment advice. For example, CargoMetrics, a Boston-based investment firm, used the Automatic Identification System (AIS) to collect data on commodity movement, such as cargo location and cargo size, in order to develop advanced analytics for stock trading, currencies, as well as equity index funds. This tool was also sold to other hedge funds and wealth managers.
Supporting this, we advise companies to focus on Innovation which is a critical component that will likely drive the market over the forecast period. The increasing use of data technology is changing the business and enabling wealth managers to provide better solutions to their customers. This includes using efficient access to customer wealth management by providing services such as planning, advising on, and managing various kinds of assets, and developing user-friendly online reservation apps.
According to our industry analyst, the global market is moderately fragmented, with a large number of international and domestic players present. Key Wealth Management companies are expected to focus on expansion strategies in order to gain regional market share, raise awareness, and enter developing markets. The growing consumer demand for reliable and consistent solutions is driving the demand for standardized and personalized advice. As a result, market participants are concentrating on providing computer-driven analysis in order to provide standardized advisory services.
Top Trends in Global Wealth Management Market
- Wealth managers are increasingly investing in emerging technologies to improve customer experiences, such as Robo-advisors, artificial intelligence (AI), robotic process automation, and digital identification (ID). FinTechs (financial technology) have significantly impacted the wealth management industry. FinTechs are a broad category of new technology that is used to enhance and automate the delivery of financial services.
- Investments in cybersecurity and human-centered design are essential for creating a superior digital client experience as wealth management (WM) organizations accelerate their digital transformation efforts (CX). Sustainable investing, another enduring trend, is gaining popularity and producing more complex customer demands. ESG rating and individualized client engagement will depend more and more on data and analytics skills. Competition is growing historically fierce as established financial services firms focus on their wealth management sector and emerging digital players make industry breakthroughs. Client experience is the new front line of conflict.
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Targeting Customers from Generations Y and Z
Demographic shifts and global wealth expansion are generating new customer segments. By 2028, an estimated 250 million Generation Y and Z customers (those born between 1981 and 2012) will earn more than $100,000 per year.
From 2021 to 2028, SkyQuest predicts a $90 trillion rise in cash reserves from all investors worldwide, with $40 trillion emerging from individual people with assets between $100,000 and $1 million. The United States and Asia-Pacific will be the driving forces.
Wealth Management Using Artificial Intelligence
Wealth management firms are incorporating artificial intelligence, machine learning, and data advanced analytics and provide hybrid services. Artificial intelligence refers to intelligent machines that operate and react in the same way that humans do. Through its virtual chat interface between the business and its clients, AI assists in providing real-time insights into complex client questions.
Based on a study conducted by SkyQuest Team, 34% of wealth management firms already have implemented AI, and nearly 99% plan to do so within the next three years. Wells Fargo and Bank of America have already implemented AI services to better serve their customers. Wells Fargo has launched an AI-powered application on Facebook Messenger to personally respond to customer inquiries. Morgan Stanley, a wealth management market leader, also has the most extraordinary AI intergenerational advisory infrastructure. Similarly, according to a study from a 2020 survey, 80% of wealth management firms are either deploying client or advisor-facing AI-powered technology. The survey also reveals that by 2024, three-quarters of firms will shift from directing to operationalizing AI.
The full results of SkyQuest’s survey of Wealth Management are available in the report consumer preferences for Wealth Management section.
Scaling Up New High-Tech, High-Touch Delivery Models
SkyQuest’s analysis of the market reveals that it is flooded with numerous local and regional players. Companies are competing to gain the best service network to lead the market. Wealth managers will need to provide a more comprehensible value proposition for younger clients with less liquid assets than older generations if they want to produce outsized growth in the future. For businesses to expand the ratio of clients per adviser to over 300, it will be necessary to develop a delivery strategy that actively leverages digital tools and channels and saves human encounters for crucial or challenging episodes. The luxury goods sector was rejuvenated by a similar trend of expanding brand appeal and reach.
Greater returns at scale will continue to be driven by these currents. According to a study by SkyQuest, digitally intensive models have around a 35% better return on the scale than conventional models.
Even though the market is crowded, there is still room for expansion. The market is expected to grow in popularity, particularly in North America and Asia-Pacific Region. North America dominated the market in 2021. The region’s HNWI population is steadily increasing. These HNWIs are increasingly interested in advanced financial advisory services. Some of the major market players are also based in North America. Another factor boosting regional market growth is the increasing digitalization of the financial sector in several North American countries. Over the forecast period, Asia Pacific is expected to be the fastest-growing regional market.
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Major Players in Global Wealth Management Market
- Bank of America Corporation
- BNP Paribas
- Charles Schwab & Co., Inc.
- Citigroup Inc.
- CREDIT SUISSE GROUP AG
- Goldman Sachs
- JPMorgan Chase & Co.
- Julius Baer Group
- Morgan Stanley
- UBS
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