It’s time for wealth managers to digitalize and customize their clients’ portfolios if they haven't done so already, according to Refinitiv, a global provider of data and infrastructure for financial institutions.

Refinitiv laid out trends that will shape wealth management in the next few years in its latest report, “The Transformation of Wealth Management – Five Trends for 2020 and Beyond.” The report was accompanied by a survey of 46 wealth manager firms asking how the firms are preparing their businesses for the future.

Wealth management firms are customizing their portfolio creation to fit the particular clients and, in particular, are focusing these services on the next generation of investors and on high-net-worth investors.

“A clear appreciation of the need to tailor and customize portfolios has seen many firms starting to develop strategies for targeting specific client segments and offering fully customized offerings to meet the needs of those segments,” the report said. “In line with this, almost all (90%) interviewed wealth management firms have recently or are currently reviewing and revising their segmentation models.”

To enable customization, wealth managers need to fully adopt digitization through a coherent plan, Refinitiv said. A significant 86% of respondents rank servicing clients as a highly important digital capability, followed by 69% who view the provision of information as "highly important," according to the survey.

“The wealth management industry is still in the early stages of digital transformation, but with increasing urgency wealth managers are rethinking the strategies and business models that define their business,” Christopher Sparke, Refinitiv's global head of front office and digital for wealth management, said in the report.

All of the managers who participated in the survey said the upcoming wealth transfer is one of their three top concerns. Ninety percent of managers have recently or are currently reviewing their client segmentation models in order to serve individual clients.

The second trend, digitalization, may not be as easy as some think. “Many wealth managers around the globe lack a coherent digital strategy and the organizational consensus to implement digital capabilities," the report said. "Some of the most common challenges for the adoption of digital capabilities cited include cost, speed of delivery, and integration with legacy systems.”

Firms also are updating their operating techniques to be more efficient, which includes partnering with fintech companies. More than 60% of the firms surveyed said they are willing to leverage outsourcing propositions to enhance capabilities, scale or in-house resources. The degree of willingness ranges from 58% in Europe to 70% in Asia and the Americas, the report said.

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