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The global private wealth industry in a post-Covid world

8 July 2021

Alison Parry

Head of Private Wealth

Alison Parry

Head of Private Wealth

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There’s no doubt that Covid-19 has profoundly impacted the global economy – not to mention people’s lives and livelihoods.

We at Intertrust Group have helped our clients to navigate these challenges, and made a concerted effort to support our colleagues too – from wellness initiatives to a 24/7 help desk in India. Now it seems one key legacy of the pandemic, in the context of the global private wealth industry, has been to accelerate trends that were already driving the evolution of the sector. The firms, advisors and jurisdictions best able to meet these demands and cater to the changing needs of clients will likely succeed in a post-Covid-19 world.

What are these trends? As part of our latest Global Wealth Trends Report, Intertrust Group canvassed the views of private wealth management professionals located across the world and identified the following stand-out themes. We expect these to escalate in importance as we look forwards across the next few years.

Private capital funds are becoming more popular

Private capital funds are becoming more popular as a means to manage private wealth – and financial centres that cater for this demand remain well positioned to grow. As Intertrust Group has cited before, the world of private wealth is continuing to merge into the more regulated world of private capital and investment funds, particularly with regards to family offices.

Private capital fund structures represent an increasingly attractive option for many in the private wealth space. This was reflected in our survey, with the number of private clients setting up private fund structures in the future expected to be higher than currently seen.

The rise of private capital funds also shows how wealthy clients are looking for vehicles that allow them to invest ‘anywhere in anything at any time’ – and, increasingly, in a regulated environment. Our research found that more and more clients understand the benefits that come with regulated structures. This, we believe, is set to be a huge industry growth driver over the next two years.

Private wealth is being driven by technology and data analytics

Technology remains at the centre of the evolution of the private wealth market industry – including for the jurisdictions and service providers that cater for wealthy clients. Covid-19 and the rise of remote communications and service propositions has added further momentum to this industrial shift.

Consolidated reporting requirements, greater compliance and portfolio transparency, rich analytics, and giving clients greater control over their wealth have fuelled the rise of sophisticated tech platforms and reporting tools. Cybersecurity and AML concerns are expected to drive further tech innovation in the short term, according to the research.

However, it is the intense focus on ESG and the switch to more ESG-compliant asset allocation among private clients that will likely accelerate the tech focus. As data around ESG investing develops and matures, the need to reflect, accommodate and audit this in private client portfolios and assets will be significant. This cannot be viewed simply as a ‘box-ticking’ exercise for clients – but as a real transformational shift; those who don’t prioritise ESG today will likely lose competitive advantage in the years to come. Effective data management and use of the right platforms and reporting tools – and partners – will underpin the success of refocusing portfolios towards greater ESG exposure.

Importantly, clients themselves are placing more emphasis on service provider tech skills: almost a third of respondents said this was now ‘critical’ in terms of the firms they use to help manage and structure their wealth.

Conclusion

The private wealth sector has largely managed the Covid-19 period well. But it has done so by constantly adapting and meeting new requirements. As an industry, it has continued to grow and evolve, and represents a dynamic, truly globalised marketplace where best practice – particularly with regards to technology and service adaptability – will continue to attract the greatest numbers of clients.

In this environment, dedicated service providers such as Intertrust Group will be instrumental in providing the right data, reports and analysis to help clients navigate the complexity of these new norms. Ultimately, though, our strong client relationships will always be at the heart of everything we do. That’s one thing that will never change about private wealth: its focus on people and their families.

Read more in our Global Wealth Trends Report 2021 here.

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