9 Wealth Management Trends for 2021

9 Wealth Management Trends for 2021

by January 14, 2021
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Sustainable investing, hyper-personalization and ecosystem building are among the top nine trends wealth management firms must prioritize in 2021, French consulting firm Capgemini says in a new report.

In a paper titled Top Trends in Wealth Management 2021, the company outlines the main trends in wealth management for the year ahead. Some of these trends were already featured in last year’s report but remain relevant for 2021, while others like sustainable investing and hyper-personalization, have accelerated amid the COVID-19 pandemic.

Top wealth management trends 2021 - Priority matrix, Source- Capgemini Financial Services Analysis, 2020

Top wealth management trends 2021 – Priority matrix, Source: Capgemini Financial Services Analysis, 2020

COVID-19 accelerates digital transformation

COVID-19 has accelerated the digital transformation of the wealth management industry and firms have started boosting their tech spending.


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A 2020 research by Celent, the tech advisory arm of Oliver Wyman, estimates that wealth managers will spend US$21.4 billion on tech by the end of 2020. The figure is projected to grow at a compound annual growth rate (CAGR) of 5% year-over-year (YoY) until 2023, when it would reach US$24 billion.

Client-facing wealth managers will need access to the right tools and technology to manage client portfolios and provide seamless digital service holistically, the report says.

Sustainable investing heads towards the mainstream

A key trend for 2021 that gained ground before COVID-19, is sustainable investing. Over the past few years, sustainable investing has grown and evolved, but the pandemic has bolstered interest in these products, which investors view as sound and less risky in disruptive times.

With COVID-19 rattling markets, sustainability-focused funds attracted record capital in Q1 2020 with an inflow of US$45.7 billion into sustainable funds, according to Morningstar.

Rising demand for sustainable investing will force wealth management firms to build new capabilities, the report says.

Hyper-personalization for customer loyalty and growth

Wealth management firms face increasing competition from digital advice models by wealthtechs, especially since the pandemic. In this context, technologies like artificial intelligence (AI) and analytics can help them enhance customer experience by personalizing solutions and services.

By effectively capturing customer data from multiple sources, wealth managers can use predictive analytics to generate relevant recommendations and products, ultimately increasing customer loyalty, the report says.

Tapping into underserved segments

Despite remaining largely underserved, segments including women and mass affluent investors are becoming increasingly prominent wealth segments.

The Centre for Economics and Business Research (CEBR) estimates that 60% of the UK’s wealth will be in women’s hands by 2025. In the US, the mass affluent market currently holds around US$9 trillion in assets.

These underserved segments represent a major opportunity for wealth management firms, which they now must focus on to bolster revenues and a future client base. Capgemini recommends firms to prepare their workforce to better engage with women, as well as start building an offering for the mass affluent segment with the right mix of digital self-service and advisory services.

Next-gen client reporting

Offerings from tech giants including Google, Amazon, Facebook and Apple have redefined customer expectations. Today’s wealth customers want easy, interactive and personalized reporting.

To compete with wealthtech startups, and tech-focused companies, wealth management firms must provide next-generation client reporting features that allow clients to view complex portfolios through a digital reporting platform on multiple devices, the report says.

Many traditional financial services providers have partnered with startups to deliver such capabilities. Credit Suisse, for example, has teamed up with wealthtech startup Canopy to give investors access to automated account aggregation features as well as sophisticated analytics and insights.

Alternative data sources and real-time data

Wealth managers, hedge fund managers and traders are exploring alternative data sources to generate higher investment returns to meet client demands.

A survey conducted by the Alternative Investment Management Association and SS&C found that out of 100 global hedge fund managers, 69% of the market leaders use alternative data to boost performance.

Moving forwards, wealth management firms will need to add new talent, such as specialists in financial and technological resources to efficiently use alternative data sets, the report says.

Rethinking fee structures

Increased competition and fintech innovations in the wealth management industry are forcing big firms to rethink their fee structures to attract new client segments.

Fidelity has adopted a subscription-based fee pricing model for digital advice, shifting from an asset-based pricing model. Barclays launched in July 2020 a robo-advisory service called Plan & Invest in partnership with German startup Scalable Capital which targets checking account clients with a minimum GBP 5,000 to invest.

Capgemini advises wealth management firms to collaborate with fintech companies to source technology and gain access to an established platform that enables new revenue streams.

Beyond investment advice

Changing customer expectations are driving the need for wealth management firms to explore beyond investment advice and give clients a more holistic financial services experience.

Many traditional financial institutions are already embracing the trend. In Singapore, UOB Private Bank created the Next-Generation Programme, which brings young investors together to network, exchange ideas and learn about digital trends. Morgan Stanley has leveraged its acquisitions of E*TRADE and Solium to develop a comprehensive suite of financial wellness solutions.

In this context, technologies including APIs, AI and analytics will form a critical foundation for wealth managers to develop and provide valued-added services and new products, the report says.

Ecosystem collaboration

Finally, the 9th trend outlined in the Capgemini report is the imperative for wealth management firms to embrace ecosystem collaboration. By partnering with wealthtech companies and bigtech firms, wealth management firms can accelerate their digital journeys to meet evolving client needs in the post-COVID-19 world, the report says.

Examples of such collaborations include Vanguard and Ant Financial Services Group, which teamed up to offer retail consumers in China a streamlined investment advisory service. Goldman Sachs, as well as the partnership between Canadian portfolio manager Marksman Asset Management and wealthtech company Pascal Financial to improve client onboarding, client management and compliance oversight.

Top Trends in Wealth Management 2021 Infographic

Top Trends 2021 in Wealth Management Infographic, Capgemini, Nov 2020

Top Trends 2021 in Wealth Management Infographic, Capgemini, Nov 2020

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