Motive Insights

By Motive Partners

Motive Insights - The Banking Sector Doubles Down on Wealth Management



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February 13 · Issue #292 · View online
Motive Insights
The wealth management sector has garnered much attention - the total global household wealth is projected to increase by nearly 40% over the next five years and the generational wealth transfer, with $30 trillion exchanging hands over the next decade, has begun. And in recent years, banks are moving in a multitude of ways to get in on the action, with established financial institutions looking to drive more value by offering asset management and wealth distribution services and products to their customers. 
Shift to Digitization
A major wealth management trend banks are seizing on is the digitization of not only the entire advisor process, from proposal to trading to client reporting, but also on the customer experience side. The pandemic accelerated this shift to digitization as wealth managers saw a 7 to 10x increase in client engagement across digital channels, with 20% of investors saying they would consider switching wealth providers because of their digital platform experience. 
Getting Closer to the Source
Significant wealth has been created in recent years among entrepreneurs and management teams, from billion dollar exits to crypto-millionaires, this has created a new opportunity for banks to bring this growing demographic on as clients. An example of this was Morgan Stanley’s 2019 acquisition of Solium. Solium is a SaaS company that provides stock plan administration technology and services to a breadth of clients, including fast growth companies. Such moves provide banks with broader access to corporate clients and the ability to bring those corporation’s employees on as clients, including a younger demographic with significant growth potential. This opportunity grows as the client’s age as well, as plan participants build their wealth their needs become more complex, and the bank’s advisors are standing by to transition the relationship away from the platform and into a more advisory relationship.
Accessing New Products
As tech-enabled automation grows, banks can offer their customers a more personalized experience through a hybrid model of automated online tools and online engagement with wealth advisors. Moreover, faced with a historically low interest rate environment, banks like UBS and JPMorgan are are pushing to expand and bolster their offerings beyond the retail banking space. Motive portfolio company, CAIS, exemplifies this trend. CAIS is a marketplace for alternative investments, providing a technology-enabled platform that enables financial advisors to subscribe to and monitor investments in Alternatives at scale, and importantly with a critical educational function, ensuring advisors understand these now accessible products on behalf of their clients. CAIS plays to this trends as wealth advisors seek to educate themselves and tap into a historically tricky-to-access asset class, to meet their client demands and needs. Accessing alternatives has proven to be an attractive model and the space has had a boom of entrants recently, including players like Moonfare and Titanbay.
Back-End Growth
In the face of pricing pressure in an increasingly digitized world, banks are looking for ways to streamline internally and are in search of the right provider to do so. This is not a new trend in 2022, as wealth technology investment had a record-breaking year in 2021, with funding reaching $14.6B, a 156% increase over the 2020 year-end total. FNZ, a provider of wealth management solutions that automates back-office processes which were previously pain points, supports this trend, by outsourcing large parts of the value chain primarily focusing on back-office services, significantly reducing operational costs for its clients.
With the increasing adoption of technology-enabled Wealth Management solutions, banks and FinTech entrepreneurs with the foresight or skill to pivot or develop their strategies are poised to win. 
And as you know, wealth management technology continues to be an area of focus for Motive, continue reading below for additional insights from Rob Heyvaert, Founder & Managing Partner at Motive, and Hafiz Lalani, Managing Director, Head of Europe, Direct Private Equity at CPP Investments.
About the Author: Catherine Mills is an Associate at Motive Partners in the Investor Relations Team.

Quote of the Week
This week, Motive Partners & CPP Investments signed a definitive agreement to invest $1.35 billion in FNZ Group to accelerate the digital transformation of the global wealth management industry.
Hafiz Lalani, Managing Director, Head of Europe, Direct Private Equity at CPP Investments, said:
“FNZ offers a unique, end-to-end value proposition which enables the world’s leading wealth managers to provide personalised, transparent and accessible solutions to enhance consumers’ long-term savings while reducing cost and complexity. FNZ has seen considerable success and we are excited to support FNZ and its leadership in continuing to deliver on their vision to expand FNZ’s global footprint, while at the same time delivering attractive risk-adjusted returns for CPP contributors and beneficiaries. “Partnered with Motive, we believe we bring a unique combination of long-term capital and specialised expertise in the wealth management sector. We look forward to being a strategic and value-added partner to FNZ and to joining the business’ existing investors.”
Rob Heyvaert, Founder & Managing Partner at Motive Partners, who will join the FNZ Group board as a Non-Executive Director on completion, said:
“We could not be more excited about our collective opportunity to work alongside the FNZ team. Since FNZ’s inception, its growth trajectory has been extraordinary, and as we combine our strength of expertise, knowledge and access to the global financial services ecosystem, we have the opportunity to deliver an exceptional value proposition to wealth and asset management customers all over the world to meet growing demand.”
Read more on the deal here.
Motive Portfolio Highlights
  • InvestCloud has partnered with The Wealth Mosaic to pinpoint the 2022 digitalization priorities of wealth managers. The survey contains 15 questions to capture the wealth management industry’s views, priorities and concerns around technology for the year ahead. Access survey here.
  • Wilshire - CEO Mark Makepeace interviewed with Markets Media to discuss his plans to expand Wilshire. Read the full conversation here.
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“Small opportunities are often the beginning of great enterprises.” 
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