Technological prospects are changing rapidly for asset managers, as are their clients. New technology offers an excellent opportunity for asset managers to digitise and improve their inventorisation processes, such as Know Your Customer and Customer Due Diligence. But few asset managers really make use of the opportunity. The financial sector is conservative by nature and values personal service. This sales model is also known as “Analogue sales” in America. There is also a new generation of investors; Millennials and Generation Z. Existing asset managers are usually from a different generation (Baby Boomers and Generation X) to these new clients, which is causing a divide between the new generations’ needs and the older generations’ offering.  


A new generation

New (asset management) clients are often younger and from a different generation (Millennials, Generation Y).  There is a risk of a potential mismatch between the analogue service models of asset managers and the (digital) expectations of new clients.

Jack Welch (former CEO of General Electric) has issued a warning. A famous quote by Jack Welch is: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near”. The lack of speed of the essential changes could become a problem for asset managers.


Research by Forbes

In a recent publication (Five Predictions On The Future Of Wealth Management 15 May 2018), Forbes states that asset managers’ existing clients: Baby Boomers (1946 – 1960) have reached the respectable age of 59 – 73. Baby Boomers own 80% of accumulated personal wealth in America. Their children, the Millennials (1985 – 2000), will inherit that wealth. This process has already started and will only accelerate. This could become the largest transfer of wealth in the history of humanity according to Forbes. Forbes quoted Ernst & Young in the same study. In a recent study, Ernst & Young found that only 22% of asset managers are below the age of 40.


Millennials were born in the digital age. Social media and the internet are in their genes. They can find information quickly, but it is difficult to hold their attention. Millennials expect their providers to offer fully integrated technology-based solutions that revolve around themselves (as clients).

There is a growing divide between new clients’ expectations and asset managers’ interpretation of the asset management discipline. Add to that the increasing pressure of regulations and competition and increasingly critical clients, and the challenge only becomes greater. If asset managers realise that technology offers opportunities, solutions will soon be forthcoming.


The future
For this reason, a number of IT providers from the Asset Management sector are working together to present the financial sector with a vision for the future that centres on the client again, with more scope for personal attention to supplement digital information provision. Upholding regulations and executing routine tasks is outsourced to software robots.

Asset managers have time to focus on their core business and that is to achieve maximum returns on investment for their clients, based on a holistic and complete client profile, including a psychological risk profile.