5 megatrends that are reshaping wealth management

Wealth management is undergoing a dramatic transformation, driven by megatrends that are permanently altering the trajectory of a growing industry.

Here is a summary of five developments that are re-shaping the way advisers do business, from a study commissioned by software firm Laser App.


Wealth will continue to grow, which will result in increased demand for financial advice. According to a recent study by Pershing, there is nearly $32 trillion in investable assets in the United States, creating a massive opportunity for the wealth management industry.
This number is projected to increase, spurred by the powerful U.S. economy, further driving wealth creation, resulting in a projected 40% increase in the number of millionaires over the next five years.


With the advent of the Department of Labor’s new fiduciary best interest rule, massive changes are in store for wealth management. This new standard for retirement accounts translates to a generational regulatory change.
By mandating that professionals who offer advice on retirement assets act in the best interest of the client, commission-based advisers, broker-dealers, insurance companies and investment product purveyors will all need to drastically alter their business models.

According to industry studies and firm reports, independent broker-dealers are spending up to $16 million each to rectify their platforms in order to comply. Whether or not the DoL rule gets altered or delayed by politics, the fiduciary movement is fully underway and forward-looking firms are embracing this approach as the new operating standard, leaving those in doubt behind.

Robo advisers are a growing phenomenon, offering personalized investment advice through online, digital and mobile platforms. Many industry professionals predicted that the robos’ early success would do to advisers what Amazon did to booksellers or Expedia did to travel agents.

That didn’t happen.

Instead, robos brought needed client experience innovation to the industry. This enhanced, automated service model provided easy-to-use interfaces, account aggregation capabilities and wealth views, along with advanced mobile access and paperless account openings. Robos ended up presenting the wealth management industry with powerful new capabilities that should be adopted as welcome innovations.

Advisers will need to up their game in articulating the value they provide by highlighting their relationship-based and behavioral finance services models. If advisers are purely transaction oriented, then their long-term sustainability is in doubt, as those functions will be replaced by robots that can do those services faster, better and cheaper.


Retirement trends are accelerating in general, and advisers in particular will start to retire in large numbers over the next few years, creating both challenges and opportunities for industry participants.

According to multiple industry studies, the average age of advisers is getting close to 60 years old. There are now more advisers over the age of 80 than under age 30. The industry is faced with an urgency to develop a transition plan. The industry has not planned appropriately, creating angst among executives and end-clients alike.

The recent uptick in mergers and acquisitions among advisory firms is expected to continue as advisers look to monetize their businesses. The next big question for the industry is: Where will be the next generation of advisers come from?


This perfect storm of industry developments has created the megatrend of employee-based advisers leaving their mother ships and going independent as a startup RIA, joining an existing RIA or aligning with an independent broker-dealer as a contractor representative.

As technology has improved, advisers no longer need to have a vast institution to provide them with access to investment products, client service capabilities or money movements.

According to industry research firm Cerulli, approximately one quarter of current wirehouse advisers will become independent over the next few years.


The future is already starting to emerge as investing becomes more of a commodity and technology is playing a bigger role in the delivery of wealth management advice.

We believe that advisers will become bionic in the sense that they will provide a combination of human advice with technology-driven operational efficiencies to deliver content and services through various channels. This will create more capacity in the industry to adjust for the decline in the population and enable advisers to more economically serve smaller investors.


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