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Capgemini World Wealth Report 2020

It’s clear that no industry has been left untouched by the global pandemic. According to the International Monetary Fund, global economies are braced for a 4.9% decline in 2020 with the pandemic erasing more than $18 trillion through February and March of this year.

Capgemini’s report looks at the way this has shifted priorities for HNW individuals and the opportunities businesses now have to “reassess and reinvent their business models to be more agile and resilient” against future threats.

The key areas of focus for Capgemini’s report are as follows:

Sustainable Investment

  • HNWIs are now placing far greater importance on environmental and social priorities. “While 27% of HNWIs overall expressed interest in SI products, 40% of ultra-HNWIs were willing to put cash into sustainability.” Over half of the HNWIs interviewed consider environmental risks and climate change as key areas for focus.
  • HNWIs plan to allocate 41% of their portfolio to SI products by the end of 2020, and 46% by the end of 2021. In addition to an increased conscientiousness regarding environmental impact, this newfound interest in sustainable investment appears largely down to the perception that such investment offers higher returns and lower risks.

Hyperpersonalisation

  • Continuing a permeating trend through most of the FS industry, there is a new demand for hyperpersonalisation within product ranges. HNWIs are looking for bespoke risk profiles, comprised of detailed behavioural science and sentiment analysis, that is specifically targeted to them
  • In an age of continuing technological advancement and innovation, clients expect wealth management firms to have strong digital capabilities allowing customised reporting and tailored advice through data analytics and machine learning.

Disparity between Wealth Managers and their HNWI clients

  • Wealth Manager fees were a notable topic of dissatisfaction with 33% of those interviewed uncomfortable with rates in 2019. According to the report, more than one in five HNWIs might switch firms in the next year with high fees being the top reason for 42% of HNWIs. There is an increasing expectation for strong, personalised performance and services for the fees charged.
  • Despite the fact only 26% of wealth managers consider BigTech as serious competition, they may be overlooking the perception of their HNWI clients. 74% of HNWIs report a willingness to consider wealth management offerings from BigTechs, jumping to 94% among the 22% of HNWIs who say they may switch their primary wealth management firm in the next 12 months.

Increased demand for digital services

  • The aspects of services that caused the most HNWI dissatisfaction were acquisition, advisory and value-added services within the customer journey
  • Capgemini recommends that wealth management firms can tackle this with an Open X approach that will allow data and resources to be efficiently exchanged, allowing for continuous improvement of the customer journey and meeting the hyperpersonalisation needs as described above.

In summary, Capgemini’s report suggests wealth management firms should invest in technology to expand their in-house digital capabilities. The uncertainty caused by the pandemic will mean the industry must be ready to innovate and adapt to a rapidly changing environment and evolving customer demands.

Read the full report here

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