The Wealth Management industry, and the entire financial services sector more generally, is deeply impacted by digital. Its transformation is the consequence of new clients' needs and the increasing number of new pieces of regulation being implemented. In this respect, roles and functions are also being disrupted, hence the need for companies to first understand these changes in order to prepare their talents for future tasks and missions. Faissal Amer and Laurent Elias, respectively Head of Finance and Head of Private Banking, from Kingsley and Partners, tell us more about the transformation of the role of wealth managers.

Digital habits and new needs

"Customers, in general, are more aware of what they buy but also of specific laws and rights, notably when it comes to their personal data. For instance, GDPR, since its implementation, has had a huge impact on every single industry, and will continue to change the way companies conduct their business. It's also true for the financial service providers," explains Laurent Elias. Indeed, clients – especially Millennials, but also customers who have been trusting their banks and financial institutions for several decades – are now requesting more flexibility and immediacy through the use of innovative tools, from websites to apps. In the field of Wealth Management, customers can use such digital tools to check their account balance and deal with their daily operations, but are still looking for personalized pieces of advice coming directly from their privileged interlocutor. "The trend is to combine technology with strong human relations in order to build trust while giving customers more autonomy and control. On the other hand, wealth managers are therefore augmented, immediately increasing the added-value in the service there are providing and in the management of the portfolios. We are witnessing the advent of a phygital environment which combines the knowledge of experts and the ease of use of digital tools," adds Laurent Elias.


The impact of regulation

As the human-side – and therefore the trust aspect – remains key in such sectors, we are seeing the development of premium offerings, with dedicated private bankers and wealth managers building customized solutions and managing, almost on a daily basis, their Ultra High Net Worth Individuals' assets. This also explains the current consolidation trend that is happening in the financial services industry, with groups and companies getting together in order to provide their clients with wider and stronger offerings/solutions. As explained by Faissal Amer, being a wealth manager in today's environment also means mastering several other fields, from credit and real estate to life insurance and private banking. "Hybrid roles are therefore being created, as traditional functions are becoming more diverse. Through intense and specialized training sessions, wealth managers are clearly enlarging their scope," adds the career management expert. In fact, training finance experts is not an option anymore: the MiFID II regulation, which aims at making European financial markets more transparent and to strengthen investor protection, and the CSSF Circulars 17/665 and 17/670, actually request professionals to attend certification sessions.


The rise of sustainable finance

Finally, ESG (Environment, Social and Governance) concerns are growing on the clients' side. As a matter of fact, green funds are more and more integrated in their portfolios. "Every interest or future interest of customers instantly requests wealth managers and financial services experts to master the topic so that they can suggest the most appropriate or innovative solution, hence the need to constantly train and upskill," highlights Laurent Elias. Luxembourg is well-positioned when it comes to "green finance" thanks to the efforts of the Luxembourg Stock Exchange (LuxSE), aiming at promoting sustainable finance, notably through the creation of the Luxembourg Green Exchange (LGX) in December 2016. It has since become the world's leading platform for green finance. As explained on the LGX website, issuers generate awareness about their projects and investment portfolios by displaying their securities on the platform. It also caters to environmentally and socially-conscious investors by providing full and unrestricted access to a comprehensive online database of information on sustainable instruments.


With today's clients requesting more flexibility but also needing customized offerings and trusted relationships, financial services companies are dealing with change and need to constantly reinvent themselves. The implementation of additional regulation with the aim of protecting the customer, namely MiFID II and GDPR, also impacts most of the roles and functions found in the wealth management and private banking industries. Training and upskilling have become key, allowing companies to retain their customers by delivering up-to-date and innovative pieces of advice. Moreover, the sustainable and social elements are making more and more sense, requesting finance professionals to adapt and integrate green finance in their investment strategies and portfolio management. A profound change in culture and functions is happening: these transformations are reshaping the entire financial services industry. “We are also seeing a rise in the number of applicants requesting to be exclusively considered for roles within firms with a green approach”, concludes Faissal Amer.

Publié le 13 mai 2019