Top Ten Trends in Wealth Management 2017

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The wealth management industry around the world is witnessing a multitude of changes due to weak economies in the developed world, strong growth in developing markets like China and India, an uncertain political future in Europe, increasing regulatory supervision, and new competition from rising FinTechs and their innovative services for High Net Worth Individuals (HNWIs).
Our analysis in this paper revolves around the impact of the above mentioned dynamics on the industry players and how they are adapting through this phase of transformation.

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Top Ten Trends in Wealth Management 2017

  1. 1. Wealth Management Trends for 2017
  2. 2. 2Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Wealth Management Trends 2017 Spate of regulations is encumbering wealth management firms with more compliance related activities Increased Focus on Fiduciary Duty and Client Interest Business-As-Usual Taking Up a Significant Portion of Investment Budget Continued Focus on Cybersecurity in Light of Increasing Digitization 1 2 3 Wealth Transfer Remains A Significant Growth Opportunity Shifting client needs are disrupting established models while also creating new opportunities Emerging Advisory Models Evolving Fee Models 4 5 6 In response, wealth mangers are seeking enhanced digital capabilities and firms are focusing to improve mid- and back-office productivity Growing Demand for Digital By Wealth Managers Surge in Robotic Process Automation 7 8 Furthermore, firms are also looking to leverage emerging technologies and partnering with FinTechs Collaboration With FinTechs Increasing Application Of Artificial Intelligence Based Analytics 9 10
  3. 3. 3Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Fiduciary Duty Gaining Prominence due to Regulatory Focus US$17 bn Yearly cost for American clients because wealth managers are incentivized to push higher margin products DOL Fiduciary Rule to be Effective from April 2017 Lower Costs for Clients Stricter Regulatory Environment Transparency Source: Capgemini Financial Services Analysis, 2016; “Obama Vetoes Resolution to Kill DOL Rule; New Lawsuit Filed”, Diana Briton, Wealth Management, June 9, 2016, accessed October 2016 at http://www.wealth management.com/legal/obama-vetoes-resolution-kill-dol-rule-new-lawsuit-filed BICE Best Interest Contract Exemption (BICE) conditions will ensure that advice is in clients best interest
  4. 4. 4Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Business-as-Usual Taking Up a Significant Share of Investment Allocation of Firms 15.3% Investment budget needed for business- as-usual activites, restricting new proposition development Source: Capgemini Financial Services Analysis, 2016; WWR Executive Interviews, 2016 Increased compliance requirements make day-to-day activities a burden Wealth Managers want better digital access and collaboration with clients
  5. 5. 5Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Continued Focus on Cybersecurity in Light of Increasing Digitization Increased Investments More Openness = More Risk Prime Targets 74% Wealth managers had been a target of a cyberattack Source: Capgemini Financial Services Analysis, 2016; “Is your wealth manager a target for a cyberattack?”, Deborah Nason, CNBC, February 3, 2016 accessed October 2016 at http://www.cnbc.com/2016/02/02/is- your-wealth-manager-a-target-for-a-cyberattack.html
  6. 6. 6Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Emerging Advisor-Client Relationship Models to Cater to Client Demand Pure Automated Advisory Model Source: Capgemini Financial Services Analysis, 2016 Hybrid Advice Model Holistic Goals-Based Financial Planning and Wealth Management Model
  7. 7. 7Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Evolution of New Fee Models Only 23.6% of HNWIs want AuM based fee, but 30.1% use it currently. Performance based Fee Structures Changing Customer Demand New Value Propositions Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey, 2016
  8. 8. 8Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Intergenerational Wealth Transfer Remains a Significant Growth Opportunity $36 tn Wealth is expected to be transferred to heirs from 2007 to 2061 Need for succession and inheritance tax planning Source: Capgemini Financial Services Analysis, 2016; ‘New Report Predicts U.S. Wealth Transfer of $59 Trillion, With $6.3 Trillion in Charitable Bequests, from 2007-2061’, Boston College Center on Wealth and Philanthropy, May 28, 2014 Great opportunity for wealth managers New demand of younger HNWIs
  9. 9. 9Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Growing Demand for Digital Tools by Wealth Managers 80% Wealth Managers believe digital tools have positive impact on their overall ability to cater to HNWIs 72.9% HNWIs say digital maturity is significant in increase/decrease decisions with asset allocation High Demand for digital capabilities by HNW clients Wealth Managers want better digital access and collaboration with clients Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey, 2016; Global HNWI Insights Survey 2016, Capgemini
  10. 10. 10Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Surge in Robotic Process Automation in Mid- and Back-Office Replace Routine, Repetitive, Rules-based Tasks Improved Compliance Source: Capgemini Financial Services Analysis, 2016 Enhanced Accuracy
  11. 11. 11Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Increasing Collaboration between Incumbents and FinTechs FinTech Innovation & Development Capabilities Synergy will Enhance Client Experience Incumbent Distribution and Brand Loyalty Source: Capgemini Financial Services Analysis, 2016
  12. 12. 12Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Increasing Application of Artificial Intelligence Based Analytics Solutions Cost Benefits Productivity Gains More Customization Source: Capgemini Financial Services Analysis, 2016
  13. 13. 13Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services About Capgemini With more than 180,000 people in over 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients, Capgemini creates and delivers business, technology and digital solutions that fit their needs, enabling them to achieve innovation and competitiveness. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model. Learn more about us at www.capgemini.com Rightshore® is a trademark belonging to Capgemini The information contained in this presentation is proprietary. © 2016 Capgemini. All rights reserved. www.capgemini.com

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