The wealth management industry is incredibly resilient. The Covid-19 global pandemic has made 2020 a year for the record books, but in the face of unique challenges the wealth management industry has charged forward with an entrepreneurial spirit. 

While we expect the pandemic to continue to influence the trajectory of 2021, there is great reason to feel optimistic about where our industry is headed with more positive change, growth and success to come. 

Below are three key areas we expect to significantly impact the industry in the year ahead: 

Technology. It is human nature to be resistant to change, particularly when it can impact your business and push you beyond your comfort zone. However, the pandemic left both financial professionals and their clients with no choice but to accept change in order to move forward. 

In particular, the pandemic accelerated both the demand for—and acceptance of—digitization across the industry. Tools like eSignature and Zoom, which had experienced slow adoption, are now routine. 


Looking ahead, we expect the rapid adoption of technology to continue to accelerate and unleash a new wave of enhanced productivity. Even as financial professionals return to their offices, they will unlikely go back to their old ways and forgo the efficiencies gained by embracing new technologies. Covid-19 has acted as an accelerant to building better businesses.
 
Money in motion. There were fewer financial professionals transferring between firms throughout 2020 due to the hesitation brought on by the pandemic. However, Covid-19 has created a real gut-check opportunity for financial professionals. Are they with the right partners, providing the right resources in challenging times? Should they be independent and focused on creating their own equity value? 

The risks associated with switching firms and transitioning clients have dissipated, and we expect to see much more money in motion. In particular, we predict financial professionals with smaller practices will join larger firms with deeper resources, and more wirehouse professionals will leave their employers in favor of independence as they realize they do not need the "brick and mortar" offering they once depended on. 
 
Increased M&A. We expect to see increased consolidation at both the institutional and retail wealth management levels. For institutions, the reality is the game is harder and the competition is stronger. Wealth management platforms are contending with more regulatory pressures, dampened revenues, increased costs and heightened demands from financial professionals to deliver better value. As a result, we expect the industry to continue to consolidate into fewer, larger players. 

We also predict increased consolidation at the RIA or "retail wealth" level. Baby boomers have been the pioneers of our industry, and many of them still own wealth management firms today. This generation has been through more than their fair share of volatility—from the dot.com bubble to the Great Recession and beyond—and many seek monetization and continuity strategies given the current uncertain economic environment.

I remain very optimistic about 2021. With the election settled, we will soon have more directional clarity around taxes and regulations. The markets are fans of stability and predictability—this should be good for everyone. Regardless, our industry's entrepreneurial creativity is adapting quickly, setting the stage for growth and transition in the upcoming year.

James Poer is CEO of Kestra Holdings, a platform for independent wealth management professionals.