The wealth management sector is at a crossroads. The new generation of consumers, Generation Zs and Millennials, are clearly demanding to consume services digitally, but they also expect wealth management solutions that are socially connected and personalised to the extreme. Our research shows that more than 75% of Generation Z investors want to manage their finances personally and meaningfully. In the Middle East, with its young and affluent population, this is especially pertinent.
For wealth managers, this means there is an opportunity or, rather, the necessity to reinvent themselves to meet this demand.
Indeed, the latest research from Accenture suggests that investors in the United Arab Emirates (UAE) are underserved by wealth managers. Good returns are no longer enough; wealth managers need to nurture relationships, strengthen digital channels, and expand the breadth and depth of accessible digital asset classes and ESG-linked propositions (see page 48).
The potential upside for wealth managers who can meet next generation investor demands is compelling. Middle East assets under management (AUM) hit US$1.2 trillion in 2021 according to BCG, and PwC sees an estimated yearly AUM growth of at least 6.2% globally.
So, what do wealth managers need to consider to be a part of this growth? A key factor is the development of the right range of products and services to meet the requirements of their clients, underpinned by technology. This is no longer achievable simply by launching a mobile app. It should be based on a platform connecting the best-in-class technology, data and service providers.
Rise of partner ecosystems
Digital transformation has already pushed some of the more progressive firms to look beyond traditional industry boundaries and leverage the capabilities of partner ecosystems. This allows them to deliver omni-channel digital experiences in a much shorter time span, as opposed to innovating in-house or relying on just a single technology vendor.
Creating a coherent and consistent integration across service providers, data sources, functionality, and the customer will allow for the quick adoption of new services. The outcome will be a seamless and holistic experience for the end user.
Whether the investor wants access to traditional assets such as stocks, bonds, or newer ones such as ETFs or crypto, the ecosystem should provide efficient and seamless access to partners that can be added quickly, efficiently and based on investor demand. An ecosystem approach can enable the delivery of a broad range of functionality, such as robo-advice, portfolio modelling, theme-based investing strategies like ESG, fractionalisation and many more.
The investment ecosystem should also offer the wealth manager centralised control and an understanding of each customer and their investment journey. Data and analytics capabilities also enhance administrative processes and capabilities.
A journey towards financial health
Creating a technology-centric ecosystem of relevant investing products, services, and partners will meet increasing customer demand, and the wealth manager has an opportunity to stay competitive, making sure they are able to adapt to changes in consumer demands and evolving competition.
In turn, this creates financial health, brings investment inclusivity, and develops a robust framework for the end customer in the long run. It should be a customer-centric journey with the needs of each investor at the forefront.
The choice is clear: adopt the investing ecosystem that will meet the demand and the evolving needs of the next generation investor, or take the risk and struggle to adapt and stay relevant.
What is the right range of products and services?
Retail investors in the Middle East demand personalised services and access to a wide range of investment products, including international stocks. They expect highquality research and analysis to support their investment decisions. A next generation investor is much more techsavvy and values transparency. To appeal to this audience, wealth managers should aim to tick the following boxes:
Digital platforms
New-generation retail investors prefer digital platforms that offer a seamless and intuitive user experience. They expect to be able to manage their investments online, access real-time data, and receive notifications and alerts about their portfolio. 46% of investors highly value simple, intuitive digital processes for their investment activities, while 25% currently receive financial advice through mobile according to an EY survey. The potential for growth within the digitised wealth management space is still enormous.
Socially responsible investments
Generation Z and Millennials consume financial services from sustainable and socially oriented players. They want to see companies taking a stance on sustainability, social, and environmental issues and expect their investment options to reflect this.
Hyper personalisation
New generations of retail investors expect personalised investment options that are tailored to their individual needs and preferences. They want to be able to choose from a range of investment products and expect to receive investment advice based on their risk tolerance and financial goals.
Education
Two-thirds of Generation Z and Millennials value their financial health higher than their personal health. Most of them are at the early stages of their financial health journey. Therefore, embedding educational content in digitised services provides confidence, supports good decision-making, and increases financial inclusivity. Education is not a one-time-only process. It is an evolving, very personal process of self-maturity. It should follow the customer and align with where they are on their investing journey.
Read and download the full report here.
