The digital revolution is set to "realign" the playing field for the wealth industry, as investors seek more personalised products, invest more heavily in alternative vehicles, and look to move from active to passive solutions, according to new research.
Unprepared for passives growth
Meanwhile, with over $50trn of global inflows expected over the next five years, as a growing number of investors from both emerging and developed markets begin to prioritise their savings, Roubini ThoughtLab added some wealth providers are not adequately prepared for an increase in client wealth and sophistication over the next half-decade.
"Even in normal times, wealth executives face a complex set of global economic, market and regulatory challenges. But, these are hardly normal times," said Lou Celi, chief executive of Roubini ThoughtLab.
"Many investment providers in our survey do not appreciate just how fast these changes will happen—and the profound impact they will have on their business."
It also suggests providers are not ready for further growth in passive products, despite flows reaching record highs.
Just 35% of the wealth and asset management firms surveyed are planning to add passive products to their offerings.
In contrast, the paper found 47% of mutual fund companies and 41% of full service banks are prioritising passive management, while 57% of the 2,000 investors surveyed also plan to use passive funds in the next five years, versus 49% who said they will continue to rely on active approaches.
