The international firm delves into the tasks facing the world's wealth sector at a time when the economic outlook is in some ways less friendly and when costs and client demands keep increasing.

There is every sign that the world’s wealth managers will face more erosion in gross margins for the rest of the 2020s, as compliance burdens, talent wars and rigid cost structures bite, according to an industry report from EY, the accountancy and professional services firm.

The report, entitled 2024 EY Global Wealth Management Industry Report: Rethinking The How, said: “Wealth advice, investment management and client experiences are likely to change more rapidly in the next five years than in the last 20 – creating both threats and opportunities for incumbent wealth managers.” 

The study sets out 10 challenges that wealth managers must overcome: Standing out in the age of personalisation; elevating relationship management; delivering client-centric advice at scale; creating synergies with modular offerings; providing seamless, consistent experiences; redefining the role of relationship managers; outperforming organic growth; overcoming operational complexity; building future-proof technology and data infrastructure, and redesigning control functions.

Setting the backdrop, EY’s 46-page report said the past decade has, in some ways, been benign for the industry: “Average annual financial market growth of 14 per cent from 2012 to 2021 pushed global private client wealth to an estimated level between $320 trillion and $360 trillion, aided by a strong post-pandemic recovery.”

But it added: “Since 2022, increases in inflation, interest rates and market volatility have created a far less promising economic outlook.”

EY’s report introduces “key concepts” such as “advice-centred affluent banking”; the idea of the “advisor co-pilot” (aka, virtual assistants based on AI); “complexity reduction and efficiency improvement in core operations”; “extending incentive models for the front office”; “front office unburdening”; “harnessing AI for wealth management,” and more.