Wealth Management and Disruptive Change

Five key insights from other industries

Disruption can be painful. Other industries provide a reminder of how painful the process can be — from Uber disrupting the taxi business to Apple changing the way people consume music to Airbnb shaking up the hotel industry.
But disruption is not a one-time event risk. It is continuous pressure to innovate in the face of changing consumer behaviors, new technological innovations, and new competitors entering the market. Today, this pressure is rising fast, even affecting sectors previously insulated from disruption like wealth management.

Historically, wealth management has been relatively immune to disruption. The reasons for this are threefold: first, a special regulatory status shielded the sector from too much competition; second, clients have historically been slow to switch providers, even in the face of high fees
and in cases of unsatisfactory investment performance; and finally, opaque fee structures have made it exceedingly difficult for clients to compare pricing options among competitors. However, today, in a post-Covid world, the industry seems ripe for change as the lockdown period accelerated multiple consumer trends, including the rise of retail investors.