Wealth management is undergoing a sea change. There has never been a time when so many forces have come to bear at once on the industry, requiring financial advisors to improvise their offerings and differentiate themselves. Elsewhere in this issue, Professor Dan Richards has identified several strategies for serving this important client segment (see “The New Rules to Attract Affluent Clients,”. This article, instead, is a look at some structural changes shaping the overall wealth management industry, based on an Accenture study of more than 1,300 investors in both Canada and the U.S.

It should come as no surprise that technological innovations are one of the key drivers of change in wealth management. Given the recent proliferation of robo-advisors, some investors might interpret their growth as the rise of the machines, eventually “terminating” the need for their human counterparts. On the contrary, research indicates that hybrid advice models are the most dominant. Clients value a real human advisor and expect to use technological innovations as basic utilities, rather than as differentiators. Clients are demanding bespoke service with the expectation that advisors will use cutting-edge tools for portfolio management and client reporting, and will also engage with clients to foster transparency and open dialogue using modern technology.

These sorts of demands become more pronounced the younger and wealthier the clients are. These clients are more likely to turn away from prefabricated portfolios that don’t fit their unique goals and financial situations, and to seek out specialists. This pattern of behaviour implies that one single advisor may not be qualified to serve the needs of a star athlete, a young tech entrepreneur, and a baby boomer transitioning wealth to the next generation; each one of these clients requires a specialized advisor who intimately understands their wealth management needs.

The other key drivers are demographic. The first is the rise of women as major investors, making this era quite different to past ones. Thirty-four percent of women rely on dedicated advisor models compared to 28 percent of men, but they talk to their advisors less often than men do (44 percent versus 58 percent). That helps explain why, overall, women report less understanding of their investments and holdings relative to men. Women also have their own unique needs and approach investing with a different lens, and with a different set of portfolio objectives and requirements from advisors, than men. To the astute advisor, this is a huge opportunity to craft a value proposition appealing to this important segment of investors.

The second demographic segment challenging the status quo is the young investor, who explicitly seeks a unique value proposition and differentiator in their advisor. The higher the net worth of the client, the more stringent their evaluation criteria will be. In addition, their level of satisfaction seems to be at the extreme ends of the spectrum. On one end, they don’t feel they’re obtaining enough value for the fees they pay; they also feel their advisors don’t give them the attention they deserve, or have the skill or alignment of goals with the investor. This should serve as a warning for the generalist advisor and an opportunity for the specialist.

Specialists may find it appealing that, for the young investors who are satisfied with their advisors, 64 percent of them turn to their advisor for investment advice and 60 percent of investors prefer to know their advisors on a personal level. Finally, 66 percent of investors said they would refer their advisor to others, providing a steady stream of new clients and relationships to build. In essence, satisfying existing clients becomes the main driver of growth, ultimately aligning the investor’s and advisor’s interests.

While a unique value proposition has become important to drive growth and keep moving forward in this new era, the traditional values of integrity, honesty, and always acting in the client’s best interest remain the key forces that will keep an advisor’s business afloat in the midst of this sea change.