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Wealth Management

Defining Events

Many important events—such as the establishment of professional credentialing programs; the increasing federal regulation of wealth managers; the emergence of the Internet, social media, and other technology; and the growing economic power of women and their increasing representation in wealth management—have shaped the industry.

Promoting Quality in the Profession

Investment and finance professionals have provided services to clients for more than a hundred years, but the quality of their advice has varied greatly. By the mid-20th century, many in the industry began to feel that standards were needed to increase professionalism and ensure public trust. In 1947, 11 representatives from financial analyst societies in Boston, Philadelphia, Chicago, and New York voted to form the National Federation of Financial Analysts Societies. In 1959, the federation established an independent organization—the Institute of Chartered Financial Analysts—to administer the chartered financial analyst (CFA) credentialing program. (After several name changes, the institute is now known as the CFA Institute). The first CFA exams were administered in 1963. Today, the CFA Institute has more than 178,000 investment professionals and educators in more than 160 countries.

The certified financial planner designation is also well-respected in the industry. Its origins can be traced to late 1969, when 13 industry professionals gathered and resolved to create the International Association for Financial Planners (IAFP) and the College for Financial Planning. In 1972, IAFP enrolled its first group of students for the certified financial planner (CFP) course at the College for Financial Planning. In 1973, this first graduating class formed a new membership organization called the Institute of Certified Financial Planners. In 1985, the College for Financial Planning established an independent, nonprofit certifying- and standards-setting organization, and transferred ownership of the CFP certification program to a new organization, the International Board of Standards and Practices for Certified Financial Planners, Inc. (now known as the CFP Board). As of 2020, more than 86,000 people in the United States had earned the CFP designation.  

Technology Changes the Industry

Over the last 25 years or so, technological developments such as the computer, the Internet, mobile devices, social media, and cloud computing have changed the way wealth managers do their jobs. For example, wealth managers no longer receive information on the financial markets from the daily newspaper dropped on their front porch, but rather digitally 24/7 through the Internet. Snail mail has been supplanted by e-mail, instant messaging, and video conferencing. Wealth managers still advertise their services through word-of-mouth and in upscale financial publications, but they also use social media and the Internet to interact with and attract new clients. Wealth managers at large firms now use customer relationship management software to better understand their clients, and large firms use proprietary software to communicate, track, and record all activities related to a family’s personal, trust, investment, and business enterprises. Blockchain technology (a distributed ledger database that uses advanced cryptography to maintain a continuously-growing list of financial records that cannot be altered) is increasingly being used by financial firms to improve efficiency and the accuracy of financial record-keeping and reporting. In summary: technology has allowed wealth managers to better communicate with and understand their clients, but it also has created increased expectations from clients, who have more access to information about financial services and products and higher expectations regarding the availability of their wealth managers due to e-mail and social media.

Another noteworthy technological development is algorithm-driven financial portfolio management software that allows customers to invest with minimal human interaction. Robo advisory firms have emerged to provide robo advisory investment services. At the end of the third quarter of 2019, robo advisors collectively managed $283 billion in assets, according a report from Aite Group, a consulting firm. The five biggest companies—Betterment, Wealthfront, Personal Capital, bloom, and Acorns—managed 89 percent of these assets. The Aite Group estimates that the robo-advice market will reach $1.26 trillion in assets under management by the end of 2023. Fifty-eight percent of Americans surveyed by Charles Schwab in 2018 said that they planned to use some form of robo advice by 2025. But respondents who planned to use robo advice also wanted to retain the human touch. Seventy-one percent of people wanted a robo advisor that also provided access to human advice. Some traditional wealth management firms also are embracing the use of robo advisory software to complement their traditional offerings.

More Women Entering the Field

In the United States, women control about 51 percent of wealth, according to New York Life Investment Management. Despite this fact, women (as well as ethnic minorities) have been traditionally underrepresented in the wealth management industry. In 2017, just 15.7 percent of financial advisers were female, according to research from Cerulli Associates. The number of female advisers employed by wirehouses (such as UBS Financial Services, Goldman Sachs, Morgan Stanley Wealth Management, BofA Securities, and Wells Fargo Advisors) is much lower. The CFP Board published a whitepaper analyzing why women were underrepresented in the wealth management industry. Here are the top reasons why they avoid the industry:

  • Compensation structures and business models may be unfair or unattractive to women.
  • There are not enough mentors and role models for women who aspire to careers in the industry.
  • Work-life balance concerns may be a deterrent.
  • There may be a misconception that one needs a strong math background to succeed in the industry. While mathematical acumen is necessary, strong interpersonal and communication skills are often cited as equally as important as math ability for success in the industry.

In the past decade, the tide has begun to turn, and the percentage of women in wealth management has slowly increased. Professional associations and many banks and large investment firms have made efforts to encourage more women to enter the wealth management industry. One groundbreaking organization is the Association of Women in Alternative Investing, which seeks to increase the number of women in hedge funds, private equity, and venture capital firms, as well as the number of women in all other areas of the financial services industry, by providing mentorship, networking, and education opportunities for women who are currently working in or contemplating entering these fields. Additionally, the CFP Board’s Center for Financial Planning created the “I am a CFP® Pro” campaign ( to encourage more women and ethnic minorities to pursue careers in financial planning.

In addition, banks and wealth management firms such as Morgan Stanley, UBS, Raymond James, and J.P. Morgan are increasing their efforts to create a more diverse workforce by launching summer internship programs that target female undergraduates, implementing more female-friendly practices and fringe benefits, hosting career days at high schools and colleges to encourage women to enter the field, hosting women-centric events (e.g., Raymond James’ annual Women’s Symposium), and launching or expanding women’s networks that provide professional development and networking opportunities.

COVID-19 and the Wealth Management Industry

In late 2019, the coronavirus COVID-19 was detected in China and quickly spread to more than 210 countries, causing tens of millions of infections, more than a million deaths, and massive business closures and job losses. In the short-term, the COVID-19 pandemic negatively affected the health of individuals; employment opportunities at businesses, nonprofits, and government agencies; and daily life. The pandemic also affected job-seekers and employees. Some companies cancelled or delayed internships and other experiential learning opportunities, while others converted them to an online format. Onboarding of new hires was either delayed or moved to an online format by many companies. Most employers transitioned in-person interviews to telephone and online formats, and many businesses required their employees to work at home some or all of the time.

In early 2020, the economic effects of the pandemic caused stock markets to crash and a global recession to occur. More than $18 trillion was erased from global financial markets in February and March 2020, according to the World Federation of Exchanges. By early September, the U.S. stock market and other financial markets had rebounded—although performance still lagged 2019 highs. In the short term, the strength of the U.S. economy and the world economy is closely tied to government efforts to slow the pandemic and support workers and businesses. In the long term, the outlook for the investment industry is strong. Global assets under management are expected to increase from $104.4 trillion in 2019 to $145.4 trillion by 2025, according to the professional services firm PwC. Wealthy people will continue to need wealth managers to manage their money, as well as protect it during economic downturns.    

Research conducted by J.P. Morgan has found that the pandemic—and its negative impact on economies around the world—served as a wake-up call for both investors and wealth managers to consider more socially responsible investment strategies. “Over the long run, COVID-19 could prove to be a major turning point for ESG investing, or strategies that consider a company’s environmental, social and governance performance alongside traditional financial metrics,” said Jean-Xavier Hecker and Hugo Dubourg, Co-Heads of ESG & Sustainability within J.P. Morgan EMEA Equity Research. J.P. Morgan surveyed investors from 50 global institutions, representing a total of $12.9 trillion in assets under management regarding how they expected COVID-19 would impact the future of ESG investing. Seventy-one percent of respondents said that it was “rather likely,” “likely,” or “very likely” that the “occurrence of a low probability/high impact risk, such as COVID-19, would increase awareness and actions globally to tackle high impact/high probability risks such as those related to climate change and biodiversity losses.” The value of global ESG assets reached $40.5 trillion in 2020, according to Pensions & Investments, more than tripling in eight years. “The largest percentage of money managers cited client demand as their top motivation for pursuing ESG incorporation,” according to U.S. SIF: The Forum for Sustainable and Responsible Investment, “while the largest number of institutional investors cited fulfilling mission and pursuing social benefit as their top motivations.”

Other changes fueled by the pandemic relate to customer communication methods. Before the pandemic, wealth managers often met new and existing clients in person to discuss their investment goals and other topics. But during the pandemic, wealth managers were forced to conduct most of these in-person meetings on the telephone or via online communication platforms. This transition to these communication methods may be long-lasting, according to a 2020 survey of investors by fintech firm Broadridge Financial Solutions. Fifty-seven percent of investors said that communications with their financial advisors changed in some manner due to stay-at-home mandates. And 62 percent of this group said that they would entirely or partially maintain these new communication methods (phone, e-mail, and video chat) after the pandemic ends.     

Finally, the pandemic prompted many wealth managers to have to rely on communications, collaboration, information security, cloud computing, and other types of technology to interact with clients and work effectively with team members. Firms that had invested strongly in building these capabilities before the pandemic performed better than those that had not done so. “As a result of the pandemic, many firms have reprioritized their investment strategies,” according to Broadridge Financial Solutions. “Businesses may never return to the ‘old normal,’ leaving firms little choice but to accelerate their digital transformation. In June 2020, Broadbridge surveyed c-suite executives and their direct reports from 500 financial institutions globally. It found that:

  • 58 percent planned to increase investment in interactive digital technologies
  • 54 percent planned to spend more on artificial intelligence
  • 49 percent planned to improve their ability to quickly collect and analyze data.



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