Paying Closer Attention To My Financial Statements

4 Wealth Management Trends To Watch

6 December 2021

Barb Morgan

Most people associate wealth management with a distinctive form of steady monetary inflow. That is one of the attractions of WM, but it's also important for clients to learn about emerging trends. If you're trying to figure out how to grow and manage your wealth, you'll want to keep up with these four developments.

Inflation

Everything old becomes new again, and inflation is no exception. Inflation represents one of the biggest threats to wealth because it can eat away at asset values and buying power, even while a portfolio is realizing numerical growth. Even if you're invested in an asset class with a high rate of return, such as municipal bonds from cities with low credit ratings, watching 7% inflation try to outrace your 8% return is no fun. Folks with lower returns are in even worse shape, often seeing loss once they factor in the inflation adjustment.

Extreme Personalization

With the advent of wealth management software tools, clients and managers have greater abilities to personalize investments. If somebody says they don't want to invest in companies that contribute to the environmental crises, for example, a wealth manager can tailor a portfolio quickly to meet the client's criteria. You can get very granular in assessing your risk profile and tailoring your portfolio accordingly. Cookie-cutter portfolios are largely a thing of the past, and clients can personalize as they see fit.

Democratization

Investment banking firms used to strictly sell some financial products to limited classes of people. Usually, these were large institutions where professional traders would largely do business amongst themselves. Even among high net worth individuals, access was often limited to those with experience in the industry.

The world of finance is democratizing rapidly. If you have an interest in investing in mortgage-backed derivatives, for example, there is likely to be a financial instrument available for that. Your wealth management adviser might have to dig a little bit in the software to pair you with the right investment, but you now have access to investments that were previously the domain of a few hundred institutions.

Longevity

Particularly among the wealthy, people are living longer than ever before. This means the horizon for wealth management has to span further. Someone who wants to retire at age 55, for example, needs to think about how well their wealth might hold up if they live to 90 years old. Even missing the longevity estimate by 5 years could have an adverse impact on your standard of living in those years.

Contact a wealth management service, such as Horan, to learn more.

Share

Search