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In the face of increasing economic uncertainty and evolving geopolitical dynamics, wealth management firms find themselves confronted with the imperative to excel and overcome various challenges. A particularly significant challenge involves meeting the expectations of a younger clientele. To remain relevant and effective, wealth managers must embrace innovative technologies and cutting-edge software solutions that align with contemporary demands.
Insights from a recent study conducted by Oxford Risk, experts in behavioural finance, underscore the pressing need for wealth managers to integrate clients’ sustainability preferences into their services. The primary obstacle hindering this integration is the lack of accessible tools and software capable of efficiently evaluating clients’ environmental, social, and governance (ESG) inclinations.
The study by Oxford Risk reveals a stark reality: fewer than one in five respondents strongly concur that their firms have successfully integrated a systematic approach to discerning clients’ sustainability objectives within their existing operational frameworks. A mere 26 percent of respondents express strong agreement that they possess the necessary software and tools to effectively appraise investors’ ESG preferences and sustainable investment aspirations.
The regulatory landscape, exemplified by MiFID II requirements, mandates the inclusion of sustainability preferences in suitability assessments. However, with less than a fifth of wealth managers currently equipped with the means to meet this obligation, an evident void exists in the market to facilitate the integration. This issue extends beyond the realm of ESG integration, shedding light on the broader deficiency of digitisation and innovative software within the wealth management sphere.
This deficiency hampers wealth managers’ ability to communicate effectively and offer transparent insights to their clients. Indeed, insights from EY’s 2023 Global Wealth Research report, evidence that, apart from a track record of strong performance, investors prioritise a seamless, high-quality digital interaction when selecting a wealth manager.
UBS stands out as a prime example of embracing technologies. The firm’s strategic embrace of technology, manifested through streamlining and automation, has positioned UBS as leaders in the sector. By capitalising on digital advancements, UBS is projected to save a substantial £1.1 billion, which they intend to reinvest. Their tech-driven approach chiefly centres on developing digital tools for advisors, enabling them to offer clients a comprehensive overview of their financial possibilities. By doing so, UBS provide clients with a greater overview, with thorough outlines of choices, informed recommendations, and a heightened ability to execute decisions with precision.
A substantial 89% of investors express a preference for engagement through mobile apps, necessitating the refinement of existing portals. According to Christian Edelman, Managing Partner at Oliver Wymann, this current wave of tech-forward, digital transformation in the wealth management arena is indicative of a new phase, coined as “wealth management 3.0.” However, even amidst this technological surge, investors maintain an expectation for a personalised touch and value-driven human interactions, combined with a tech-forward approach.
Georgina Murrin is a ESG Analyst in Itriom’s London Office.
Itriom is the global impact platform helping leading families shape a better world. Itriom’s platform enables families to refresh and redesign their values, aligns them with the right UN Sustainable Development Goals, combining them in an agreed purpose and a Family Impact Charter. Itriom’s platform supports the development of impact initiatives and whilst providing discrete and secure spaces for peer-to-peer messaging and collaboration. Itriom’s core practices in Leadership, Geostrategy, and Sustainability benefit clients by developing strategies to engage and support the Next Generation in building a lasting legacy of which families can be proud.Â
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Alizah is an ESG Consultant and researcher. She supports Itriom developing sustainability related products and services, helping our clients identify potential opportunities for creating positive environmental, social and sustainable impact.
ESG Analyst
Georgie is an ESG Analyst and researcher. She researches trends, develops insights and reports, and writes insight articles on sustainability and ESG related topics to ensure Itriom’s clients are up to date on the latest policy, progress and initiatives to inform the platform and help our clients maximise their positive impact.
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