AI set to revolutionise wealth management operations

1 October 2024 — LSEG (London Stock Exchange Group), a leading global financial markets infrastructure and data provider, today releases a new report, The Future of Wealth: Why Consistency Matters, highlighting the impact of Artificial Intelligence (AI) in wealth management.

The Impact of AI

AI continues to shape the wealth management industry, with 62% of wealth management firms acknowledging that it will significantly transform their operations. This will need to meet the expectations of over two thirds (68%) of investors who expect their digital experiences to match those of leading technology companies. Wealth management firms cited a host of benefits that an AI-enabled approach offers, including greater automation and speed, a reduction in manual errors, cost-effectiveness and more. AI also appealed to investors substantially, promising constant connectivity, ease-of-use, cross-device access and lower costs.

The Value of Advisors

However, the report found that AI itself could not serve as the final product; rather, it enhances the role of advisors and functions as a tool for capacity building.

Trust remains integral to the advisory role. When asked what was the greatest value that advisors could bring in the next three years, almost half (45%) of investors who currently use an advisor, and more than half (51%) of those who do not, believe the primary value of an advisor in the next three years is in providing trusted investment advice.

Around a third of all investors also valued equally how advisors help to 1) holistically meet financial and life goals, 2) provide innovative investment ideas approaches and opportunities and 3) are available when needed, especially in difficult situations.

Towards a Hybrid Advisory Model

The report suggests that a hybrid advisory model, blending human expertise with AI, will become the standard. Investors are generally open to AI being used in their investment journey, most prominently for researching financial products and services (over 90%) and supporting advisors in portfolio management (over 80%).

Where Are the Opportunities for Wealth Managers?

Finally, the report identifies key areas where wealth management firms need to address evolving investor expectations. These include:

• Delivering Omnichannel Experiences - Investors are increasingly expecting omnichannel experiences, with 46% of investors accessing accounts via mobile apps, wealth management firms need to enhance mobile and digital interactions. 35% of millennials and 34% of Baby Boomers seriously consider a wealth manager’s digital capabilities when choosing a provider.
• Filling Data Gaps - Addressing knowledge gaps, particularly in sustainable investing, can offer wealth managers a competitive edge. Over half (52%) of investors who do not use an advisor, cited a “lack of knowledge about sustainable investing”, when queried about barriers in the sustainable investment space.
• Cost-Effectiveness – Ultimately, the bottom line was an important consideration, with almost two thirds (64%) of all investors seeking more cost-effective solutions, including lower fees and simpler fee structures. Despite this, over half of all investors (51%) also indicated their willingness to pay a premium for financial advice during periods of perceived volatility and/or complexity, indicating the tangible value of financial advice. 
   

Sune Mortensen, Head of Wealth Solutions, LSEG, said: “In the competitive wealth management industry, we understand the immense pressure that wealth firms and advisors face in attracting, engaging, and retaining their clients. The prevalence of AI and other technological advancements are also making wealth managers rethink their business strategy and client engagement models. There is a growing need to demonstrate value as well as effectively manage increasing trading volumes.”

The report also coincides with the launch of LSEG’s new integrated Wealth Advisor Dashboard on its Workspace platform designed to assist wealth managers in capitalising on emerging wealth trends. The Wealth Advisor Dashboard is a new suite of workflow capabilities and tools available on the Workspace platform. This innovative tool is part of the LSEG Workspace ecosystem and is designed to help advisors deliver consistent, data-driven insights and improve client interactions in line with the latest industry trends.

To access the full report, and learn more about the Wealth Advisor Dashboard, please visit this link.

Research

The report was conducted in collaboration with global research firm, ThoughtLab.

The research included a global survey of 2,000 investors globally across various wealth levels, ages, lifestyles, occupations, gender, and other characteristics. The study also included a benchmarking survey of senior executives from a cross section of 250 wealth management firms, from independent wealth advisors and private banks to wealth management divisions within regional and international banks.

The research covered four regions – Asia Pacific, Europe, the Middle East, and North America – and was conducted by:

Wealth level: the largest shares comprised mass affluent (25%) and high net worth (25%), followed by very high net worth (18%).

Age: the largest share consisted of Gen X (31%), followed by Baby Boomers (30%).

LSEG Press Office

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