Wealth managers and financial advisors need to enhance their ability to track the future performance and related uncertainties of key asset classes to better serve their clients, who are increasingly demanding this analysis, according to a study.
The research from Ortec Finance, a provider of risk and return management solutions, has revealed that only 32% of wealth managers and financial advisors consider their organisation ‘excellent’ at tracking the future potential performance of asset classes. Additionally, 42% rate their abilities as ‘good,’ while 25% admit their performance tracking is ‘average.’ These organisations collectively manage approximately £1.207 trillion in assets.
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According to the researchers, despite the current shortcomings, there is a strong intention to invest in improvement. 84% of respondents indicated that their company will increase investment in new solutions over the next three years to provide high-quality estimates of key asset classes’ future performance. About 11% of the respondents said they expect this investment to increase dramatically, while only 15% believe the investment levels will remain the same.
This drive to enhance tracking capabilities is largely client-driven. The second most popular reason is the growing client demand for such detailed analysis. Furthermore, wealth managers recognise that improving these capabilities is crucial for business growth and client retention, as well as for reducing costs and improving efficiency.
Tessa Kuijl, managing director, global wealth solutions at Ortec Finance, said: “While wealth managers and financial advisors already invest in tools and solutions to track the future potential performance of key asset classes, clients are increasingly expecting and demanding this analysis. It’s positive that most wealth managers are set to increase the level of investment in these areas to enhance their insight over the next three years.”
