The AI Tipping Point - What it means for Wealth and Asset Management
9 October 2023
The 2023 Edition of the Morgan Stanley and Oliver Wyman Global Wealth and Asset Management Report
Celent’s parent company, Oliver Wyman, collaborates with Morgan Stanley to publish their annual viewpoint report. The 2023 edition of the Morgan Stanley and Oliver Wyman Global Wealth and Asset Management report, "The AI Tipping Point" is now available. The report explores the industry outlook, identifies where and how to win market share, drive growth and operating efficiencies, and discusses strategies for harnessing the transformative power of generative AI across the activity chain.
The report details the perspectives from leading, global asset and wealth managers, including more than 20 interviews with senior industry executives. In 2024, success will entail the collaboration of Gen AI with specific actions to capitalize on the most attractive growth opportunities and build efficiencies throughout their operating models.
Key highlights include:
- A large opportunity for asset managers to capture share from flows among actively managed funds, which we estimate to be three times that of flows from active to passive.
- Specific actions asset managers can pursue to win share through generating “product innovation,” “distribution and service,” and “fee” alpha.
- Powerful levers asset managers can pull across the activity chain to drive 5-15% reductions in costs, with potential for 20-40% for those managers willing to take more dramatic actions.
A $200 billion revenue opportunity for wealth managers globally the intersection of wealth management and corporate and investment banking presents.
- A $35-50 trillion opportunity in Workplace Wealth, and major strategies to capture assets not only in the channel but also held away.
- The transformative power of Gen AI to supercharge productivity gains across asset and wealth management activity chains from ~30% in product development and investment research activities, to increases of up to ~40% in advisor productivity, to reductions of 50% in some back-office legal and compliance activities.
Key Gen AI success factors that asset and wealth managers will need to adopt if they are to generate sustainable competitive advantage.
Celent’s Wealth Management IT Priorities and Strategy in 2023 survey is aligned with the MSOW findings – our survey found that wealth managers are focused on becoming more agile, recognizing that they need to adapt their approach. The pace of cloud adoption, surge in activity around AI, and focus on investment product and platform innovation projects demonstrate this shift in attitudes. Celent’s wealth management research has explored the convergence across industries and business lines, the unbundling of the tech stack to create an open data ecosystem, and the power that emerging technologies have to transform entire operating models.
Celent’s 2024 previsory, “Envisioning a New Wealth Management Paradigm”, details our vision for 2024, and will be available to subscribing Celent clients on November 1, 2024.