India’s wealth management industry continues to transform at an unprecedented pace. The country’s affluent middle class is growing steadily, with an estimated 80% of households predicted to be middle-income by 2030, compared to around 50% in 2019. Meanwhile, the population of high-net-worth individuals (HNIs) is on track to increase by 75%, reaching 6.11 lakhs by 2025. Similarly, ultra-high-net-worth individuals (UHNIs) are expected to see a 63% growth within the same timeframe.
A significant shift in investor attitudes accompanies this economic evolution. During the COVID-19 pandemic, rather than panic selling, many investors focused on recalibrating their portfolios. This shift in mindset is exemplified by the record 14.2 million new demat accounts opened in FY21.
As wealth management firms position themselves to seize these opportunities, here are the top seven trends that are reshaping the industry in 2024
Investor Demographics Are Evolving
The new generation of Millennial and Gen Z investors are digital natives who prioritize connectivity and immediacy. They expect to interact with financial advisors in real-time across various channels, including video chat and messaging apps. 24/7 access to portfolio data and investment opportunities is non-negotiable for them. To secure their loyalty, wealth management firms must reimagine traditional investment ecosystems to be more personalized and responsive to this cohort’s needs.
The Rise of the Hybrid Wealth Management Model
The future of wealth management lies in a hybrid model that blends the traditional human touch with cutting-edge digital solutions. While personal relationships and empathy remain essential, clients also demand faster, more convenient digital experiences. Robo-advisors, AI-driven insights, and self-service investment portals are becoming critical components of the wealth management toolkit. Advisors will increasingly rely on digital tools to enhance productivity and meet clients’ needs more efficiently.
Growth of Alternative Asset Classes
Investors, particularly Millennials, are exploring non-traditional asset classes. Passive investing, private equity, unlisted companies, and collectibles have become increasingly popular. In addition, investments in NFTs, carbon credits, and the burgeoning ESG (environmental, social, and governance) sector are on the rise. The number of ESG-focused funds in India has continued to grow, reflecting young investors’ desire to align their financial decisions with their values.
Increased Regulatory Scrutiny
Regulatory bodies like the Securities and Exchange Board of India (SEBI) are intensifying their focus on advisory firms’ fee structures, data privacy, AI/ML practices, and crypto-assets. ESG funds are also under the spotlight. Additionally, tax regulations are expected to tighten, which could pose challenges for investors. Wealth management firms must stay ahead of the curve by strengthening their compliance programs and control systems.
Accelerating Financialisation of Savings
Historically, many Indian household wealth was tied up in physical assets such as real estate and gold. However, there is a growing shift towards financial savings, driven by the realization that over-reliance on non-financial assets can yield negative returns in the face of inflation. A more balanced portfolio approach is becoming the norm, offering better returns, liquidity, and contingency planning.
A Shift Toward Holistic Financial Planning
The new generation of investors is adopting a more holistic approach to financial planning, integrating financial goals with ethical and life goals. They are increasingly interested in impact investing, estate planning, retirement planning, and social welfare initiatives.
Demand for Hyper-Personalisation
One-size-fits-all investment strategies no longer suffice. Investors now expect highly personalized, contextual, and tailored offerings that align with their specific needs and preferences. Whether through marketing emails, customer service interactions, or investment products, every touchpoint must be customized to build and maintain customer trust and loyalty.
Implications of These Trends for Wealth Management Firms
Successful wealth management hinges on a deep understanding of evolving customer needs. However, as highlighted by these trends, keeping pace with changing investor behavior, financial goals, and life events can be challenging, especially when customer data is dispersed across multiple systems.
Imagine having a single, unified source of truth that provides instant access to customer data. This capability would empower wealth managers to communicate effectively, answer customer inquiries with confidence, and guide them to optimal investment choices.
Moreover, leveraging predictive analytics, AI/ML, and natural language processing (NLP) can reveal valuable insights into customer behavior, enabling firms to personalize every stage of the customer journey. Omni-channel engagement tools can help meet customers where they are, whether through a Facebook Live Q&A or a WhatsApp chat.
Employee experiences can also be enhanced through digital technologies. For example, intuitive dashboards can provide advisors with instant visibility into tasks, leads, and opportunities, allowing them to plan their day more effectively. Workflow automation can free up advisors’ time, enabling them to focus on what matters most—serving their clients. Additionally, integration with various portfolio management and financial planning tools can support the delivery of comprehensive financial advice.
Key Benefits of Digital Solutions in Wealth Management
- Omni-channel access to investment advice and services: Boost customer loyalty by offering seamless access across multiple channels.
- Actionable insights from customer data: Leverage analytics to deliver personalized advice at scale.
- Unlock growth opportunities: Tap into referral networks and visualize growth potential.
- Deliver connected, meaningful experiences: Provide seamless experiences throughout the customer journey, from onboarding to ongoing service.
- Drive value through agility and relevance: Enhance the delivery of investment solutions with timely, personalized approaches.
Bringing Advisors and Customers Together with Salesforce
Salesforce Financial Service Cloud helps you build and nurture trusted customer relationships by placing customers, not products, at the heart of your business. Through our platform, you can connect with investors anywhere, engage in micro-moments, and align investments with each customer’s unique financial goals. With Salesforce, you can market and sell smarter through personalized communication and automated lead nurturing.
The cherry on top is the 360-degree customer view that Salesforce provides, allowing you to understand your customers and tailor financial advice and services to their unique needs.
How Areya Technologies Can Assist
At Areya Technologies, we empower wealth management firms to navigate the evolving financial landscape with cutting-edge cloud solutions. As Salesforce Crest implementation experts, we offer comprehensive advisory, implementation, and managed services to streamline your operations, unify customer data, and enhance predictive analytics. Our bespoke solutions enable you to stay ahead of market trends, deliver hyper-personalized experiences, and meet the growing demands of today’s investors with agility and confidence.
