According to McKinsey, seismic shifts brought by the last decade’s convergence of banking and investing as well as the rise of fee-based managed accounts raise issues about the changing nature of advice and how wealth advisors approach their role in delivering such advice.
The firm predicts that the continuous and hyperpersonalized “Netflix – like” advice model will attract most customers new to the wealth management industry for the upcoming decade. By 2030, they estimate 80 percent of new wealth management clients will want to access advice in a Netflix-style model—that is, data-driven, personalized, continuous, and, potentially, by subscription.
In their just released annual report on the North American Wealth Management Industry, “On the cusp of change: North American wealth management in 2030”, McKinsey offers further multiple insights on how the industry is adapting. Their report highlights advisers’ shift of focus from being investment managers to being “more like integrated life/wealth coaches who advise clients on investments, banking, health care, protection, taxes, estate, and financial wellness needs more broadly.” Overall, the firm expects a shift away from today’s risk-based portfolio construction to a more outcome-based planning approach across multiple dimensions.
McKinsey interestingly also mentions their model is underpinned by data observed across multiple industries, most prevalent in the entertainment industry in this case — the entertainment giants have set a precedent in their streaming services of “using customer data to continuously and deeply understand preferences and develop hyperpersonalized recommendations”. For wealth managers, continuous access to customer data and continued use of technology for personalization will change the playing field for success.
This article originally appeared on Forbes.
