6 Wealth Management Industry Trends to Watch in 2021
March 16, 2021
The pandemic has altered many aspects of our society, including the world of wealth management, with trends seeming to shift almost daily.
At Farm Bureau, we keep our advisors in the know about changes in the wealth management industry by providing access to resources that offer current financial news and information.
Here are just a few of the wealth management industry trends asset managers should have on their radars for 2021.
1. Delivering Digital Experiences
Even before the pandemic, clients, especially younger generations, were increasingly seeking intuitive, digital experiences from the brands they interact with. Recent events have driven this demand through the roof and seen it spread across all age groups.
While face-to-face interactions with your clients will continue to be important and help foster relationships in the future, we predict the desire to connect remotely will remain, meaning that clients will expect the flexibility of meeting via video platforms like Zoom, Skype or Microsoft Teams.
And it’s not just meetings they’ll want to conduct online. They’ll also expect the ability to carry out most aspects of their business online, from reviewing their portfolios to making changes to their accounts.
2. Personalizing Services
It would be incorrect to assume that with more and more clients favoring digital experiences, they are valuing relationships less. It’s the opposite. Thanks to the rise of artificial intelligence and real-time data, consumers expect hyper-personalized services in most areas of their lives, from healthcare to shopping to wealth management, resulting in a stronger relationship with and affinity for the brands that can deliver a personalized touch. Advisors will need to continue to leverage technology to examine client behaviors and provide customized recommendations.
3. Offering Socially Responsible Options
More and more investors are becoming concerned about the social impact of their investments. To ease their concerns, these investors are removing investments that don’t align with their ethical values and choosing investments that do. Coined “socially responsible investing,” assets using socially responsible strategies grew 42% between 2018 and 2020, according to a report by US SIF. By offering socially responsible investment options, your business can meet the needs of the growing number of people seeking ethical investments.
4. Understanding Tax Impacts
Today’s Wealth Management Advisors don’t need to double as accountants, but being tax aware in an environment with lower returns is crucial.
To create tax-optimized strategies for your clients, look to understand sources of returns, review related investment vehicles, focus on asset allocation between taxable and tax-deferred accounts, and compare estimated after-tax returns of potential investment opportunities.
5. Planning for the Transfer of Wealth
It’s estimated that Baby Boomers will pass on approximately $68.4 trillion to their heirs over the next 25 years, according to Cerulli Associates. But most heirs don’t keep their investments with the wealth manager who oversaw the investments.
Now’s the time to start thinking through how your business could be impacted by the transfer of wealth to heirs in the coming years so you can develop strategies that help you maintain or acquire new business in the face of such changes.
6. Diversifying Strategies
As market gains favor passive strategies, it’s important to retain both active management and passive management moving forward. The trick to building a sustainable portfolio for your clients is to build a diversified portfolio that uses both active and passive strategies. Active and passive strategies help each other in diversifying a client’s risk, so it’s essential that advisors consider the expected market environment and how active strategies can mitigate portfolio risk.
Stay Ahead of the Curve
At Farm Bureau, you have the support and resources you need to stay ahead in an evolving industry. If you’re an experienced financial advisor and interested in joining Farm Bureau, let’s connect.