Wealth management market tipped to double in size by 2030

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The wealth management market is predicted to double in size, according to global consultancy Bain & Company.

The group’s study into the market suggests that customer demand for wealth management services will grow to over $500 billion by 2030; double the size of the market in 2021.

It comes after ClearView managing director Simon Swanson predicted that the number of financial advisers in Australia will increase significantly over the next 10 to 15 years.

Appearing on a recent episode of the ifa Show podcast, the financial services company head said he has high hopes for the industry based on a demand and supply thought process.

“I’ve always been a demand-and-supply person, right? And the issues in the life insurance industry, to be frank, are a classic case. There is demand for life insurance,” Mr Swanson said.

“Our survey done two years ago said that actually the increasing demand for life insurance in Australia, there’s been a supply problem. And the supply problem has been a manufacturing problem and an advice problem.

“Clearly, if you have good demand for a product, eventually, that supply will actually be resolved and that’s going to be resolved by having more financial planners. So while we’ve gone down from, let’s say 22,000 financial planners, and we may go down to 12,000, I think it’s actually going to go back to about 25,000 planners in the next 10 to 15 years, on a straight demand-supply issue.”

Bain & Company’s study also said that demographic shifts and the global expansion of wealth has created new customer segments, with an estimated 250 million generation Y and Z customers to have an annual income of over $100,000 by 2030.

“New younger customers are more self-directed and self-educated,” Bain & Company partner and head of the firm’s wealth and asset management work, Markus Habbel, said.

“While overall these emerging customers want digital delivery, for their most difficult decisions they want human interaction, requiring a high-touch hybrid approach.”

As previously expected, the study noted that wealthy millennials have a strong interest in environmental, social and governance (ESG) and 75 per cent consider it an important factor in their investment decisions.

Bain & Company predicted that ESG-related assets will make up about 46 per cent of all assets under management by 2030, up on the 33 per cent today.

The findings follow a study conducted by the Capital Group in May which found that the Asia-Pacific region is leading the world on ESG adoption.

The Capital Group’s ESG Global Study, based on a survey of 1,130 institutional and wholesale investors across 19 markets, revealed that ESG adoption in the Asia-Pacific region grew to 88 per cent versus 81 per cent recorded in 2021.

Meanwhile, research conducted in February by behavioural finance experts, Oxford Risk, found that two out of three retail investors are considering transferring their investments to a new adviser purely based on their current adviser’s engagement with ESG.

In fact, one in five said they have already done so or intend to do so.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.