The Changing Face of Wealth Management: How to Meet the Challenge

In the coming years, wealth managers across North America will have to grapple with a number of challenges that will shape the future of the business. Among them, the need to adapt their value proposition and business models to meet the needs of a new generation of clients: women and millennials.

A 2007 GenSpring Family Offices report, Women and Wealth, points out that over the next few decades, about $41 trillion will pass from one generation to the next in the US as millions of Baby Boomers retire. “Because women, on average, live seven years longer than their male counterparts, a substantial portion of this wealth will likely come into the hands of women,” the researchers said.

So the question is this: Will women and millennials transform the wealth management industry?

The answer may be found in PwC’s 2013 Global Private Banking and Wealth Management Survey.

“Our research shows that millennials are more involved in their wealth creation and management, regardless if they are first, second or third-generation wealth holders,” said Petrina Dolby, senior adviser of PwC’s Canadian Wealth Management Consulting practice, in a release about the survey results. “Most strikingly, millennials feel very strongly that they are not being listened to by the wealth advisors of their parents. This puts them as a flight risk.”

Dolby also said women continue to be an increasingly important segment of clients, but do not feel “empowered in the wealth management space”. Moreover, “women tend to outlive their male partners and stand to gain control of wealth through not only their efforts but also through inheritance and divorce. Wealth managers need to better understand the different networks of influence which younger generations and female clients rely on for decision-making, including that access to the matriarchal side of the family can provide great connections to the next generation.”

At the 67th CFA Institute Annual Conference in Seattle, a panel discussion including Patricia Edwards, CFA, a managing director in The Private Client Reserve at U.S. Bank; Deena Katz, Associate Professor, Texas Tech University and founding principal of Evensky & Katz;  Scott D. Welch, chief investment officer at Fortigent, LLC; and moderator by Margaret Franklin, CFA, president of Marret Private Wealth Inc. discussed this topic in their session on positioning wealth management firms to understand the client base of the future

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