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Wealth management will always be at the forefront for high net worth individuals (HNWIs), and 2021 was a big year for monitoring the wealth of your clients and how best to strategize what to do in 2022.
Then came geopolitical uncertainty. Then came inflation. Then came action by the U.S. Federal Reserve.
No one predicted any of that in the first quarter of 2022.
What may have worked in 2021 isn’t necessarily true in 2022 in terms of wealth management strategies.
Take a look at five key wealth management trends to consider in 2022 as we try to make sense of falling stock markets, rising prices, and new avenues of investing opening up.
More and more HNWIs want to make investments in companies that reflect their values, including RIAs.
An Accenture survey notes that 71% of investors want to align with an advisor that fits with their values.
One big ESG investing sector continues to be sustainability. Sustainable investing now accounts for more than one-third (35.9%) of investments under management in the United States, Canada, Europe, Japan and Australasia.
Sustainability is one way to drive long-term growth for investments, particularly in Europe (who leads the way), the United States (second) and Japan (third). Japanese sustainable investing has jumped an astounding 200-fold in recent years.
Another statistic to note: Since the 1970s, 90% of ESG investing has matched or outperformed traditional investing models.
Another factor to keep in mind is that wind power overtook coal and nuclear in 2022 regarding power production in the United States. Look for sustainability to be big business and money makers in the coming years and decades.
As Baby Boomers move to retirement and their Golden Years, generational wealth transfer is becoming a greater concern to high net worth individuals. Especially over the next 30 years as the youngest Boomers will turn 60 in 2024, generational wealth management will move to the forefront of their minds.
The Baby Boomer generation has around 70.5 million members, as of 2020. Amazingly enough, there are around 1.5 million more Millennials in the United States right now, so they will have wealth management needs for the next 80 years or so, leaving a hugely untapped potential for RIAs. Gen Xers, the children of Baby Boomers, will need more robust wealth management strategies to make sure family wealth increases in the decades to come.
RIAs must have a robust estate planning module somewhere in their arsenal for when the time comes to set up trusts.
Cryptocurrencies, blockchains, the metaverse, and NFTs will rise as investment opportunities. These decentralized platforms, while largely unregulated, serve as investment vehicles for large corporations.
Companies like Samsung, Under Armour, Paramount, NVIDIA, Walmart, Facebook/Meta, and Microsoft are all making major (multibillion-dollar for some) investments in the metaverse.
Make sure your staff understands the full implications of these types of investments, both from a tax and a wealth management perspective. While metaverse investments can be very lucrative when more people flock to these types of entities, they carry a large amount of risk because cryptocurrencies are very volatile since they are not usually valued on traditional stock markets.
Wealth management firms and RIAs have an opportunity to grow with personalization and customization of their services, even amid using machine learning and artificial intelligence programs.
While more and more data and data analytics are the hallmarks of software platforms these days, it still takes experts to interpret the data properly.
That’s where wealth management comes into play. You have highly trained staff who know how to use the latest tools to observe financial trends, market volatility, and prices of hundreds of investments across each client’s portfolio.
But just because a computer program spits out nifty numbers and KPIs, it doesn’t mean it makes decisions. The human aspect of wealth management means you and your staff must help your clients make the correct decisions for their investments.
Your wealth management firm relies on technology to make your jobs easier. You probably invested more in this technology after the pandemic hit in 2020, when your teams pivoted to manage client assets remotely through cloud-based software.
Remote work will continue to be a boon to wealth managers, which means you need the right technology to manage assets.
HWA International can help your wealth management firm with trust management software to help you deliver better data analytics for your clients, enabling them to make the right decisions with their hard-earned assets.
Contact our team today to discuss a demo of our software to see how it can help you make wealth management easier on your staff.
