Alternatives, AI and technology key drivers for business success
HNW advisers are more focused on business growth and see Alternatives, AI and technology as key elements
According to recently released advice industry research, adviser businesses who focus on serving High Net Worth (HNW) clients are the advice businesses most focused on growth. That growth is characterised by three key drivers:
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HNW advisers believe Alternative Assets are the asset class that will be key to meeting client demands in the future
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Technology is seen as vital to creating the operational effectiveness required for growth.
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Artificial Intelligence (AI) is a key thematic advisers expect to help accelerate their growth over the next five years.
Recently released research from platform provider Praemium and independent research house CoreData suggests that more advisers in the HNW space (27%) have strong road-mapped plans for growth than their non-HNW counterparts (21%).
The research indicates demand for Alternatives is one of the key differentiating features in the HNW space. Nearly 70% of HNW-focused advisers see Alternatives as key in meeting client demands in the future. Only 34% of non-HNW have that view. Indeed, there is a strong correlation between wealth and use of alternatives. Today, advisers managing client portfolios north of $20 million typically have an average 14% of portfolios in Alternatives. That compares to only 9% for HNW clients with lower balances.
For wealthy, sophisticated clients, access to alternatives and the diversification benefits they provide are likely to be increasingly valued in the next few years. There is likely to be an increased adviser focus on finding investment platforms that can provide easy, efficient, cost-effective access to these assets.
Advisers with strong growth plans were also more likely to adopt AI technologies recognising the competitive advantage these tools provide. Over half had a comfortable level of digital integration and 39% were already using AI with 38% expecting to in the next 12 months.
Within this space, advisers identified AI as a potential game-changer, suggesting the ability to integrate AI technologies into their back office and existing software stacks could be key to delivering greater efficiency and enhanced digital interactions with clients.
Praemium’s Chief Strategy Officer Denis Orrock commented “Today the Australian advice industry is dealing with strong demand, an undersupply of advisers, shifting regulation and onerous compliance costs. As the research showed all adviser groups see “embracing new technologies for greater efficiency” as the key response to those challenges and the most important strategy to achieve growth over the next five years. Platforms need to be on the front foot to enabling advisers to deliver a high touch service, access to new investment opportunities and to leverage tools to deliver advice more efficiently.”