In the Wealth Management Upheaval, Only the Nimble will Survive


For financial advisors targeting high net worth investors, there’s good news, eyebrow-raising news and downright terrifying news in a forecast by the global consulting firm Ernst & Young. Taken as a whole, the outlook should serve as a much-needed wake-up call for firms that are content to rest on their laurels. It also points a way forward for those willing to rethink how they run their businesses and how they present themselves in the marketplace. On which side of the divide does your firm stand?

The good: The market is booming. Investable assets held by those with portfolios of more than $1 million will grow 25% to $70 trillion by 2021. The biggest chunk of those assets will continue to be in North America.


The eye-opening: The traditional wealth management business will be barely recognizable in four years. “Wealth managers now face the challenge of adapting to a market environment that is evolving quickly, if not revolutionizing,” says EY. “Client needs, shareholder expectations, stricter new regulations and milestone developments in technology are driving future business models and shaping their requirements.”

The terrifying:  Wealth management firms that move too slowly are toast. Most at risk: product-based firms focused narrowly on managing financial assets. Nothing inherently wrong with that— asset management will always to be a central part of financial advisory — but it won’t be enough by a long shot. Close behind are smaller independent advisory firms and multi-family offices that lack the scale and resources to meet tougher compliance rules and the rising expectations of digital-savvy clients.

What firms will thrive in this brave new advisory world? FinTech upstarts are clearly in the mix, if only because disruption is in their DNA and they have access to seemingly bottomless pools of capital. But the winners will also include existing firms that are able to see beyond their asset management roots and take on a broader role in their clients’ lives. “The wealth management industry will largely see a trend toward focused and advisory-oriented business models,” says EY. “Holistic wealth managers, in particular, take a digital advisory approach driven by life events to deliver genuine added value for wealthy clients.”

So what now? How you prepare your wealth management business for the brave new world ahead? How can you transform it into the kind of firm that will attract and retain affluent clients in 2021 and beyond? By setting aside your assumptions of what wealth management is all about. By thinking more broadly about how you can make your clients lives better. By pushing the boundaries of your business comfort zone.

Your competitors already have head start.


Niles Howard is a principal of Wall & Main.

Want to read the full 2018 EY Wealth Management Outlook? Get it here.

Niles Howard