Our joint Wealth Management report with Morgan Stanley for 2020 provides an overview of Covid-19’s impact on global wealth growth and outlines several imperatives for the industry to shine after the storm.
After 2019 capped a golden decade of growth for the Wealth Management industry, Covid-19 introduced a different reality. Our base case sees global high net worth (HNW) wealth lose more than a year of growth versus pre-Covid-19 forecasts before rebounding to growth in 2021. We see HNW wealth declining by 4 percent or $3.1 trillion in 2020, a major departure from the previous decade’s consistent annual growth trajectory.
We outline three imperatives for management teams:
- Adapt to the new normal: implement the advice delivery model of the future with the RM remaining at the center of client relationships but supported with strong digital capabilities
- Defend business economics: improve approaches to cost, including tactical cost cuts, streamlined group service delivery, and transforming the operating model.
- Consolidate share and drive growth: develop differentiated product offerings ( for example sustainable investing, private markets, protection products and digital assets) and considering inorganic growth opportunities and strategic partnerships
Without the benefit of near-term growth to offset declining margins and operating inefficiencies, Wealth Managers need to act now to position their business for the “new normal”.