The future of wealth and asset management - KPMG Canada (2024)

The past few years have been challenging and transformative for asset and wealth management firms in Canada. A market that was already growing more competitive faced significant change during the pandemic, and market competition has since intensified. Technology disruption has required major adjustment, and customer expectations are higher than ever. Canada’s economy has recovered well from COVID-19, but the expectation of inflation is dampening some sector participant’s investment appetite. To remain competitive in this market, moving forward demands new strategies.

Today’s complex situation represents a pivotal junction. Approached strategically, wealth and asset managers have the unique opportunity to create high quality, frictionless service experiences for customers, and to pursue technologically-enabled avenues for internal and external investment and service delivery efficiency by becoming connected enterprises.

The biggest recent change in the mass retail space has been the steep rise in client experience expectations. The swift uptake of digital technology during the pandemic changed the way investors sought investment offerings and tailored them to personal preferences. To enhance service delivery, wealth managers are digitizing front-to-back experiences at pace, launching streamlined platforms and developing financial planning tools for an expanding range of defined and valuable customer segments.

However, as technology brings speed and customization to the end-client relationship, by no means is it replacing the traditional face-to-face service model. Rather, wealth management firms are prioritizing seamless connectivity and service delivery across digital and personal touchpoints. Many are even building out advisor capability and capacity to enhance customer relationships, particularly for high-net-worth investors.

Increasingly, the key attribute clients are hunting for in wealth advisory services is “holistic.” As a result, leading managers are designing and implementing an end-to-end, goals-based approach. Investment product design and availability are fundamental, as are environmental commitments. Consumers in the wealth domain want assurances that their investments will have sustainable outcomes, and are putting considerable attention on climate-themed products.

There’s a growing desire among asset managers to deploy technology integration not only to modernize the investment experience, but to achieve improved outcomes. Institutional investors, familiar with emerging portfolio management solutions, systems and services, are increasingly demanding customized investment solutions that enable strategies that leverage insights from advanced data analysis and emergent technologies.

While managers leverage insights to enhance portfolios and optimize portfolio management decisions, these innovations are opening the field to new non-traditional entrants and increased competition. They also make it challenging to differentiate investment outcomes without active investment value add services.

A corresponding and intensifying theme is the rising popularity of private and alternative products, which are available through channels which compete with traditional distribution channels. Some asset managers are joining the fray to launch new products and update service offerings to retain and attract customers who prefer the new “do it yourself” investment model to traditional advisor models. These managers, however, could face an uphill battle deciding where their offering fits in this new asset landscape.

Heightened service expectations are having an impact in the pension sphere as well. Members want to check the status of their investments in real-time through digital channels and are requesting virtual education workshops. Funds are coming fully online by digitizing paper records, uniting efficiency improvement, client experience gains and environmental factors through technological updates.

Despite a competitive market and inflationary challenges, wealth and asset management has enduring growth potential and a pivotal role to play in Canadian wealth-building.

Enduring success requires an approach focused on value creation – one that serves client needs and preferences at any level of wealth. Delivering more across the following strategic areas can help wealth and asset managers align their business models to respond swiftly to market conditions and align closely with evolving customer needs:

• Product customization:Retail and institutional investors alike are looking for tailored portfolios tied to specific outcomes and priorities. Digitization helps deliver insights to build better products, and better channels to deliver them.
• Relationship building A holistic relationship is seamless, end-to-end, and digitally enabled to keep pace with retail investment trends, meet the expectations of digitally savvy young investors, and take a slice of the intergenerational transfer of wealth.
• Connected A connected enterprise places the customer at the heart of a seamless investment experience. To build that experience, front-middle-, and back-end technology connect financial and business data and leverage it to provide enhanced services, superb client experience and tailored products.

Becoming a “next generation” wealth and asset manager is a major transformation that lays the foundation for future growth. A connected operating model helps generate deeper customer insights, visualize market trends, assess product strategies, and ensure regulatory compliance. Becoming digitally enabled eliminates the data silos that inherently exist between front, middle, and back offices, improving business efficiency and furnishing quality data and insights.

KPMG’s Connected Enterprise framework helps wealth and asset managers develop compelling and strategic transformation plans to meet their business objectives and to stay ahead of the curve.

Get connected. Contact one of our wealth and asset management advisers today to learn more.

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