The wealth management industry continues to face many challenges as it recovers from the financial crises of the past few years. And while financial markets have recovered most of their losses since 2008, investor confidence has not yet returned and volatility remains high.
Against this backdrop, investors now have access to a wide variety of investment information online, including analyst research, detailed company and sector financial reports, and data visualization tools previously available only to financial advisers. The combination of poor market performance, availability of information, and low-cost business models that put the investor in control are calling into question the fundamental value proposition of wealth management firms and their financial advisers.
To better understand the mind-set of wealthy investors, we conducted our first wealth management survey in January 2011. An important finding was uncovering a relatively young wealthy investor group we called "Wealthy Under-50s."
As we shared the findings with our customers, new questions arose including:
To answer these questions and provide additional insights about wealthy investors, we conducted our second survey 18 months later, in April 2012. The findings show rapidly shifting attitudes about wealth management and technology-enabled services. Specifically, we found:
And perhaps most important for financial services firms looking to capture a share of this market, Wealthy Under-55s are willing to move at least some of their assets to firms that provide these services (57 percent in the United States, 54 percent in Germany, and 51 percent in the United Kingdom).
We also found that 27 percent of wealthy U.S. investors do not have a financial adviser to help them manage their money, a finding consistent with that of last year's study (30 percent). In the United Kingdom, a staggering 52 percent of wealthy investors manage their own finances, while 40 of wealthy investors do so in Germany. Globally, however, 63 percent of wealthy investors who do not have a financial adviser are willing to work with one. We refer to this group as "Wealthy Gettables." Financial services firms can attract Wealthy Gettables with technology-enabled business models that deliver quality financial advice at a lower cost than traditional adviser-led services.
Based on the survey results, Cisco IBSG estimates that for a firm with$200 billion in assets under management and approximately$1.8 billion in revenue, the overall opportunity could be as much as$341 million. This benefit comes from:
To learn more about our research and how it can help you prepare your business for Wealthy Under-55 and Gettable investors, please download Reinventing Wealth Management with Technology-Enabled Video Services or listen to our slidecast.