Global wealth is expected to miss a year of growth as a result of the pandemic
Digitalisation will become an increasingly important part of the wealth management industry in the Middle East, to allow it to sustain its profits amid the Covid-19 pandemic, according to a new report from Oliver Wyman and Morgan Stanley.
According to pre-pandemic estimates from Oliver Wyman, wealth will grow consistently at 6 percent from 2019 onwards, although one year of growth will likely be lost as a result of the pandemic.
“We see global high net worth wealth declining by four percent, or $3.1 trillion in 2020, which is a major shift from the previous decade’s consistent annual growth trajectory,” said Raji Souag, partner at Oliver Wyman Middle East.
“Wealth managers have benefited from more than eight percent annual growth on average,” he added. “However, Covid-19 introduced a different reality. Although wealth managers have proven to be a stable anchor to group profitability, the industry has seen a transformational change during this period.”
The transformation, Souag added, is likely to lead to increased digitalisation and globalization in the industry. Such steps will include new advice delivery models, improved approaches to cost, as well as share consolidation via differentiated products and ‘inorganic’ opportunity.
The report said the human element will likely remain important, with 85 percent of respondents in a pre Covid-19 poll saying that they prefer the ability to talk to an advisor, as opposed to less than one-third who valued advice delivered via ‘robo-advisors’.
“The market turmoil prompted by the current situation has underscored the value of having access to human advisors driven by the complexity, diversity and urgency of client requests during this period of change,” Souag added.