The US wealth management industry is undergoing a transformation, driven by the emergence of new investor segments (refer Exhibit 1). This presents a substantial opportunity for both established entities and new market entrants to expand their revenue and assets under management (AUM). Wealth advisors will be instrumental in driving growth for their firms. But to achieve this, wealth management companies must adopt a tailored approach to empower their advisors across segments. We explore the evolving investor landscape and provide insights on how these firms can effectively support their advisors to drive success and capitalize on the growing market opportunities.

The American investor landscape

Exhibit 1

Key trends in the shifting US investor landscape include:

Shift in preferences of emerging investors

The increasing number of millionaires, coupled with the growing wealth in the hands of women investors and the anticipated wealth transfer to the next generation, will result in a significant proportion of wealth being controlled by Millennials and Gen Z investors over the next few decades. This shift highlights the importance of understanding the distinct needs and preferences of these emerging investor segments. Multilpe surveys reveal that these demographics will more open to diverse and newer investment vehicles. This in turn will require wealth managers to adopt a nuanced and targeted approach towards client acquisition and relationship-building. Given characteristics of each of these segments vary (refer Exhibit 2), wealth management firms will have to develop deeper connections with these investors by adopting a personalized and nuanced outreach strategy. This will allow these firms to effectively cater to the unique requirements of these new decision makers and establish long-term relationships that drive client loyalty and business growth.

Exhibit 2

As per McKinsey survey ⁽²⁾, “Women in the United States -more so than men seek hyper personalised, outcome -based financial advice that meets their real-life goals” 

Women express a greater need for a wealth relationship…

Share of respondents who agree with each statement, % overall
 

Another survey by EY states ⁽⁴⁾

As per a Capgemini report ⁽⁵⁾, key strategies for Wealth management firms to win over Gen Z clients would be:

Empowering advisors to capitalize on this shift

To tap into these segments, wealth management firms will need to adapt to the changing needs of “rewired” investors. Firms that rethink their approach to client acquisition and engagement, offering a more personalized, value-driven experience, will be best positioned to thrive. 

Wealth advisors will play a pivotal role in this transformation and equipping them with the right tools and strategies is essential for client retention and growth (refer Exhibit 3).

Exhibit 3

Tailoring strategies for different advisor segments

Wealth management firms typically have three advisor categories - associate, senior and principal - each with distinct success parameters and challenges. Firms must adopt a tailored approach to empower advisors in each category (refer Exhibit 4).

The level of support required varies across categories.

• Associate advisors, who are building their client base, require significant support with new client acquisition, particularly among high-net-worth individuals (HNIs) and very-high-net-worth individuals (VHNIs). Their primary objective is to generate sufficient revenue while acquiring high-quality clients with growth potential.
• Senior advisors, who manage a mix of VHNI and ultra-high-net-worth individuals (UHNIs), need support in scaling existing relationships and acquiring new clients. Their focus should be on nurturing long-term relationships while expanding their client base to drive growth.
• Principal advisors, who oversee the firm’s largest and most complex client relationships, primarily comprising UHNIs and select VHNIs, require support for client retention and selective acquisition of high-value relationships. It is essential for the firm to provide principal advisors comprehensive support in their key focus areas, ensuring their unique needs are met and their clients remain satisfied.

Exhibit 4

Best practices to help advisors overcome challenges

Wealth firms must adopt a focused approach to overcome the challenges advisors face.

Exhibit 5

The way forward

To summarize, wealth firms must create a tailored strategy for each advisor’s segment. They need to understand the advisor categories, aspirations and priorities of each, the client segments they manage and the unique challenges they face and accordingly enable them with appropriate tools to be successful. This will enable firms to unlock growth and retain talent.

How Crisil can support this process

At Crisil, we empower wealth advisors with tailored solutions to consistently acquire new prospects and strengthen client relationships. Our offerings include bespoke prospecting solutions, 360° client analytics, data-driven insights and a dedicated Center of Excellence for advisors for end-to-end management of client associate population. This helps enhance advisor productivity, drive revenue and enhance AUM growth. 

References

¹Global Wealth Report 2024 : UBS
²Women as the next wave of growth in US wealth management
³Cerulli Anticipates $124 Trillion in Wealth Will Transfer Through 2048
⁴How can today’s millennial investors drive tomorrow’s business growth?
⁵Digitally born, digitally demanding: Generation Z and the future of finance
⁶The Future of Wealth Management—A CEO Agenda
⁷The looming advisor shortage in US wealth management: McKinsey Article