Wealth management companies are preparing for a period of transformation for their business models driven by the impact of Covid-19 and the ageing demographics of their client bases, according to a new survey.
The study, by software provider Dunstan Thomas, found that the most significant business shift for wealth managers was expected to be towards managing assets in decumulation as a clients begin to retire, with 41% of respondents saying this was their top medium-term focus.
A further 17% said their focus for the next three years would be on "intergenerational wealth transfer", also linked to the ageing demographics of their clients.
The impact of Covid-19 was likely to have a profound impact on firms, the survey indicated, especially when it came to digital offerings. More than half of wealth manager respondents said their experiences this year would lead them to accelerate adoption of digital and multi-channel communications.
More than two thirds (69%) of discretionary fund managers said "better digital engagement with our clients, including strengthening omni-channel communications capability, will be accelerated because of the coronavirus outbreak", Dunstan Thomas reported.
"It's becoming clear that Covid-19 is set to accelerate wealth managers' plans for digital transformation," said Andrew Martin, chief innovation officer at Dunstan Thomas.
"Digital channels that are already in place are now set for significant improvement and augmentation. And many are putting in platforms and new communication channels for the first time over the next year."
More than two thirds (69%) of respondents reported having furloughed employees during the period. Half of discretionary fund managers and high street banks said they furloughed most advisory staff.
Investor portfolios fell by an average of 12.5% between mid-February and mid-June, according to the survey, as governments around the world imposed restrictions to curb the spread of Covid-19.
Portfolios run by high street banks recorded the worst performance, the wealth management study found, falling by 13.8% on average over the period.
The FTSE All-Share index lost 18% between 17 February and 15 June, according to FE fundinfo, while the MSCI World and S&P 500 fell by 6.9% and 5.6%, respectively, in sterling terms.
In the immediate aftermath of lockdown, 43% of companies said they had prioritised portfolio reviews to monitor debt, resilience and exposure to "vulnerable" stocks. Another 38% focused on "ensuring investments are diversified and ideally placed in non-correlated assets".