KBS - Financial Services and Wealth Management - Market Insight

KEY TRENDS

+ REGULATION New regulations, e.g. The Consumer Duty, have increased governmental regulatory pressure, presenting challenges for wealth management firms. In the UK, 13% more advisers have stated compliance has become significantly more challenging compared to 2023 (source: RSMR). Complying with heightened regulatory expectations requires operational changes, making acquisitions/consolidations an attractive alternative. Moreover, smaller companies may not have the capital to fund the cost of building/ upgrading current systems. M&A creates a way for them to access new technologies. In the US, financial deregulation is expected to be omnipresent under the Trump administration, which may mean M&A will be much easier in the US. European regulators may in turn face increased pressure to relax or delay financial regulations. Therefore, regional differences are expected to arise, impacting cross-border M&A. + CONSOLIDATION Larger asset and wealth management firms are expected to continue acquiring companies to achieve scale, diversify products and expand into other regions. Firms are focused on specific capabilities and technologies which drive further investment. These include crypto, blockchain, tokenisation and sustainable investing. + EXPANDING PRODUCT AND SERVICE OFFERINGS Wealth management firms are seeking alternative products to broaden their service offerings, especially those which are customer centric, personalised, improve customer satisfaction and meet the expectations of the modern customer. Moreover, firms will expand their personalisation of products/services targeted at high-net-worth individuals. A PWC survey found that two thirds of respondents want more personalisation in their wealth management relationships, especially in financial planning and investment strategy.

This can be achieved by implementing ‘next best actions’ capabilities for important milestones in the client’s life, with CRM systems that remind advisers to contact clients or by triggering automatic communications.