Future of wealth management: 9 things to know
The boom in passive investment was seen as a major asset class creation
Covid-19 has changed the wealth management business in more ways than one. From rise of alternative assets, passive to international investing changes have been manifold. Having said that, more than just investing, a person’s private wealth management involves his own financial life and even aspects outside of that. Today, wealth management has become an excellent solution for all investors for all of their financial needs.
Motilal Oswal AMC (MOANC) had organised a two-day global summit called Motilal Oswal Global Partner Summit (MOGPS). This was the second edition of the summit by the Motilal Oswal AMC. On the second day of the submit a panel discussion was held on the future of wealth management.
As per the discussion, the theme was set on how the pandemic has changed altered the businesses in India and globally and its impact on the future of wealth management.
9 Key Takeaways
Increased liquidity
As per the expert, Karan Bhagat -Founder, MD & CEO of IIFL Wealth Finance explained that from the Covid-19 perspective, this industry is the best industry to be as three things aided the industry overall. First, there has been an incremental amount of liquidity due to the central banks’ policies across the world. Secondly, the pandemic has also fuelled the savings investments and the low-interest-rate environment in last 18 months has led to a shift towards alternate assets. And thirdly, with the newer wealth coming in there has been more awareness. All these three things, to a certain extent, have led to much higher flows of liquidity in the wealth management industry.
Supportive environment
“Overall, the macros have supported well. And from the business perspective, companies have also done well. So, I think the overall environment is fairly supportive during this entire Covid phase,” added Bhagat.
New investments
As per the industry experts, the overall wealth management industry dealt maturely with their clients. The clients adapted to the new kind of investments. When it comes to the digital revolution, the wealth management industry has witnessed a rise of more low-cost and low fiction products coming in.
Diversification
Covid acted as a catalyst for passive investments like gold ETFs, ETF’s and international investing in India. “The investment and boom in passive investment were seen as a major asset class creation. Also, going ahead, diversification is going to be a theme which is here to stay,” pointed out Srikanth Subramanian, CEO, Private Wealth Investment Advisory Kotak Investment Advisors.
More efficient
As per Himanshu Kohli, who is the Co-Founder of Client Associates Covid has made the world closer, productive, and more efficient. Everyone has become very productive despite the volatility. So, from the wealth industry point of view, it is a blessing in disguise.
Focus on clients
Also, he made the case that the industry has come together as all wealth managers, instead of competing, have become friends today. And they have started discussing with each other how to take things forward. “Wealth managers have started thinking more about their clients and how to add value to that. This is something that will be set the base for all wealth managers going forward for the next 10 years,” pointed out Kohli.
Many challenges
That said wealth management industry also had to face many challenges as the wealth management operating model itself is changing.
Meeting expectations
“There are serious challenges as a lot of relationship managers have to embrace everything digital. The other challenge is that during Covid-19, clients are dedicating more time to their portfolios. For the wealth managers, they have to rise towards the increasing expectations of their clients,” said Ashish Shanker -MD & CEO Motilal Oswal Private Wealth.
Faster innovations
Vijay Chandok-MD & CEO, ICICI Securities highlighted the point that business has really innovated things much fast forward. For instance, industry experts were expecting for three-four years for new innovations to happen. Still, it just got accelerated with more people coming into digital ways of embracing the wealth management industry.