Like in other regions, the Covid-19 pandemic forced European wealth managers to suddenly adjust how they do business. Most or all employees began working remotely and client meetings are done by video or phone. Companies have found ways to adapt.
But during the past several months, Europe’s wealth managers have also come to a realization that should serve as a forewarning to peers in the U.S. and elsewhere.
“As the pandemic lingers on, what started as tactical, piecemeal, short-term changes are looking like business as usual in the ‘new normal.’ The hybrid wealth management model is here to stay,” according to an October report on European wealth managers by Aite Group, a research and consulting firm focused on financial services.
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Aite Group surveyed 20 private banking and wealth management firms operating or headquartered in the U.K. and mainland Europe. “Given the sizeable assets under management, sales forces, and geographical footprints of the firms in the research sample, the data in this report are considered directional indications of conditions in the market,” the researcher said.
Over the course of 2020, the priorities and behaviors of investors have evolved and that will be the case in the near future. The world will be virus-ridden for much or all of next year — new cases diagnosed of the novel coronavirus are rising and the timelines and effectiveness of vaccines in development are unknown.
Companies concluded they must prepare for what the wealth management industry will look like post-pandemic. The consensus among European wealth managers is that investors will not revert back to their old preferences and ways. Clients are forever changed and wealth managers must be, too.
“Seven months into the pandemic, it is clear that some firms are well-placed to flourish in the market despite the uncertainties, some firms have managed to keep going and are still trying to navigate the best way forward, and some firms are the laggards that will find it hard to continue with their current business models,” Aite said.
Most of the wealth managers surveyed by Aite were satisfied with their current digital offerings, especially their video, online and mobile offerings to clients. None of the firms were very satisfied with the ability of financial advisors to prospect for new clients in the “new normal.”
Only 33% of firms were “partly satisfied” with their prospecting during the first wave of the pandemic and almost 40% said the pace of onboarding and new account opening needs improved. “These are crucial areas in which better provisions and strategies are urgently required for [wealth managers] to ensure ongoing growth,” according to Aite.
If they haven’t already, wealth managers should immediately “take a long-term view, shape their digital and operating agendas, and incorporate a business model that is fit for the uncertain future and profitable as well,” Aite recommends.
Wealth managers in the U.S. should heed that advice, too.
The U.S. wealth management industry has been disrupted in the same ways. Face-to-face meetings, even with executives at one of the most prolific buyers of advisory businesses, are infrequent.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.