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Wealth Management Research Outlook 2024

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CAPTURING THE NEXTGEN COHORT OF ADVISORS AND CLIENTS: A SPOTLIGHT ON ALTERNATIVES, CRM, AND GENAI

Democratization of the financial markets is a reality: the core client and advisor base, whose expectations are complex, continues to expand beyond the traditional profile through fundamental market and technology shifts.

Celent’s recent Wealth Management research studied the dynamic landscape, embracing alternative asset classes, harnessing the power of Customer Relationship Management (CRM) systems, and leveraging the capabilities of Generation AI (GenAI).

An alternatives boom in wealth management may be well underway.

  • Access to alternative investment strategies (e.g., private equity, private debt, real estate, hedge funds) that used to be reserved for institutional and ultrawealthy investors is now being unlocked for financial advisors, high-net-worth individuals, the mass affluent, and accredited investors. Retail wealth management is poised to be the next frontier for alternatives as asset managers target new sources of capital and advisors welcome alts with open arms.
  • Celent research reveals that over a third of wealth management executives say incorporating alternatives into portfolio construction for their advisors and clients is among their top product/service priorities over the next 18 months.
  • By incorporating alternative asset classes into portfolio construction, wealth managers can cater to the evolving preferences and risk appetites of the NextGen cohort, attracting a new generation of advisors and clients seeking innovative investment solutions.

CRM is no longer a new or emerging product category and have become an indispensable tool for personalized client engagement.

  • However, its significant growth and development—driven by advancements in integrative technology, artificial intelligence, and the expansion of open ecosystems for data exchange—have positioned CRM as the central component of an advisor’s technology stack.
  • In recent years, the vendor landscape has undergone substantial evolution as vendors expand their offerings to meet the demands of both wealth managers and clients.
  • The CRM landscape is expansive, encompassing a wide array of vendors offering diverse solutions. The CRM space is characterized by a multitude of players, each with their own unique features, functionalities, and target markets.

AI technologies, including Generative AI, have the potential to enhance the efficiency and effectiveness of portfolio construction. However, addressing important regulatory and ethical considerations is crucial in implementing these technologies.

  • Wealth managers anticipate that GenAI will have the greatest impact in the middle office within the next two years, particularly in business intelligence, analytics, and investment functions. Use cases such as information analysis, AI assistants for practice management, and investment research are emerging, presenting opportunities to reimagine and optimize workflows.
  • Customized portfolios have become a core expectation for today's investors, aligning with their desire for personalized products seen in other industries. Improved data management strategies and technological advancements have made customized portfolios more attainable and scalable.
  • While GenAI is expected to play a role in shaping the future of portfolio construction, regulatory hurdles, ethical considerations, and the performance of other established models should be acknowledged.

Contact us for more information about what we have planned in Q4.

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