Wealth managers should use technology to grow assets under management (AUM) and reach new demographics, however, they must remain astute to consumer protection against cyberattacks, which is becoming more common in this digital age, according to GlobalData, a leading data and analytics company.
The company’s latest report, ‘2019: Trends to Watch in Global Wealth Management’ identified four main trends to come in the year:
- In the wake of CRS, non-participating countries such as the US will continue to grow as offshore centers.
- Volatility will require a rethink of diversification.
- As use of technology increases, wealth managers will have to take more serious action towards cybersecurity.
- New client demographics will become more prevalent.
As technological change is accelerating in the wealth management industry, the threat of cyber-attacks and data breaches are an increasing concern.
Sergel Woldemichael, Wealth Management Analyst at GlobalData, says, “Only 43% of wealth managers are concerned about the effect of data breaches on their brand*, which is a relatively non-chalant approach by wealth managers towards cybersecurity that needs to change.”
Technology is growing at a rapid pace, and the risk of cyber-attacks will only grow with it. Furthermore, investors themselves are seeing data breaches regarding other aspects of their life such as social media heightening sensitivity. Wealth managers should have a contingency plan in place to reduce dampening profits and damage to brand image.
Woldemichael adds, “The typically paper-based and male-dominated wealth industry is beginning to experience client demand for technology and demographic changes. Technology has helped bridge the gap between the HNW and the masses, regarding wealth management services.”
62.1% of wealth managers believe digital channels will be more important to the next generation than the current*, so it is in wealth manager’s best interest to adapt as soon as possible to thrive and grow AUM.
Woldemichael concludes: “The historically male dominated industry is beginning to see more women enter the trade. Not to mention the wealth of women is growing. Wealth managers should not remain stuck in their ways as it will only damage profits – remaining adaptive and forward-thinking will be key for growth.”