Dr Vishal Mishra made quite a bit of fame and fortune in the last 10 years as a practising general surgeon. His busy schedules would leave him little time to manage his finances efficiently. Although aware of the risks and returns of the stock market, he stayed away from securities because of his lack of expertise in trade. Instead, he locked all his money in bank fixed deposits and physical assets, including gold.
That was the system until Dr Mishra one day stumbled upon the concept of portfolio management services. Today, five years on, a large chunk of Mishra’s portfolio comprises a mix of blue-chip and mid-cap stocks across sectors. A portfolio manager helps him handle his investments more effectively now.
Earlier, only high networth individuals could afford to buy portfolio management services. But, as increasing automation restructured modern-day financial services with the help of new-age technologies, the world of portfolio management geared up for a structural overhaul. Today, almost every individual can avail affordable advisory services from any broking house.
While the portfolio management advisory helps investors navigate through the ups and downs in the stock market, in the future, say 10 years from now, KPMG predicts, the investors will demand a different set of solution, depending on their life goals, from these advisors.
As KPMG predicts, there may be fewer ‘typical’ investors in the future. They are likely to have different requirements, located in different places, with different needs, social, political and economic attitudes, lifestyles and income patterns.
“They are likely to look for financial support to cover a greater proportion of their lives rather than focusing exclusively on saving for retirement,” it says in a recent report. “As investors experience an increasing number of life events, the flexibility to adapt and change their investment portfolio will become more critical.”
Interactive services, round-the-clock connectivity, and access to real-time information will be the norm going ahead. Profit generation and return delivery will, however, continue to be the vital value proposition.
With the rise in financial literacy, the industry may be expected to provide better advice, information, education and support as investors will seek to manage their personal finances better. “Investors are likely to expect organisations to understand them, treat them as individuals, customise and tailor service models to suit their specific requirements. Investors will also increasingly look for brands they can trust,” says the KPMG report.
Delivering the level of return sought may be increasingly challenging for investment managers. As evolving needs improve investor engagement, the value of smarter propositions, outside the core investment management processes, will enhance going forward. The ease of use and simplicity of the up-front asset allocation process will also be better and seamless. The ability to assess a client’s requirements, risk-return appetite, and the readiness to tailor a solution and service model will be significant in managing finances.
Consumers will demand access to real-time information and services. While high-touch service is still important, clients expect to review their investments at any time, have access to investment opportunities across asset classes, themes, and geographies and require robust cybersecurity and data protection.
The tasks that are likely to be automated are those that do not require critical or creative thought. Simple communications and routine client servicing are already being addressed through a combination of artificial intelligence and clever client segmentation. Areas such as asset allocation, portfolio construction, and rebalancing are candidates as well. Asset managers will have to make strategic choices in terms of where they want to position themselves to capture opportunities and what value they bring.
Regardless of the market outlook, fees is likely to drop further over time.
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