How to win in today's wealth management industry: EY

To outperform in the wealth management industry, leaders must conquer several "underlying challenges" by 2030, according to an Ernst & Young (EY) report.

"Overcoming these challenges is vital if wealth managers are to create value for clients, stakeholders, and society over the remainder of this decade," the report said.

However, most wealth managers are currently a distance from achieving best practice.

One of the main challenges wealth managers face is to "stand out in the age of personalisation."

"Firms that can clear that bar and differentiate themselves strongly will benefit in terms of client acquisition, development, and retention," the report said. "The challenge is to deliver exceptional tailoring to high-net-worth clients while also stepping up personalisation at scale for affluent segments."

Another challenge was to elevate client relationship management and front-office performance.

This requires cultural sensitivity and carries the potential risk of client relationship harm," the report said. "The challenge is to modernise and simplify front-office operations in a smooth way, increasing productivity and enhancing experiences while maintaining a high level of client centricity."

Delivering high-quality advice at scale was said to be "central to wealth managers' value proposition."

"The challenge is to deliver these services at scale, while providing bespoke advice to HNW clients at a manageable cost. Technology has a key role to play in boosting relevance and profitability, but many elements must be aligned for firms to materially increase the value of advice," the report said.

EY also highlighted that smarter, synergistic approaches to investment choices can unlock "significant value for clients and wealth managers."

"The challenge is to develop a modular offering that draws on the best in-house and external products to create a whole that's greater than the sum of its parts, enabling firms to provide customised product suites to a wider range of clients," it said.

Wealth managers also need to deliver smooth omnichannel experiences for every customer journey.

"This calls for an overall channel architecture, backed up with operational alignment that can integrate in-person and digital interactions," the report said. "To outperform, firms must not only provide seamless experience across multiple channels but also maximise both efficiency and convenience in every channel."

Wealth managers must also develop sustainable routes to organic outperformance in asset and revenue growth, requiring a blend of strategic, operational, and tactical initiatives. It also means new approaches to client acquisition, activation and development, stronger brand differentiation, and opportunistic hiring and acquisitions.

Meanwhile, as client offerings expand, wealth managers have seen their operating models become increasingly complex and inefficient.

A challenge is to break out of this cycle by taking a more systematic approach to efficiency and building scalable operating models for future growth.

Finally, wealth managers need to transform the efficiency and effectiveness of their risk management and compliance activities.

"The challenge is to sweep away outdated controls and complex processes, as well as institute significant cultural changes, without compromising on safety and security," EY said.