BlackRock: European wealth management at an inflection point

BlackRock: European wealth management at an inflection point

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Between 2016 and 2021, invested assets in the region grew at an unprecedented rate of 10% on average per year. The headwinds that blew through the markets in 2022, causing bonds and equities to fall, heralded the advent of a new economic regime and accelerated the need for asset managers to adapt.

The main drivers of this change are the regulatory environment, the changing needs of end investors and the technology solutions used to expand the services provided and reach a more diverse client base. As the younger generation starts to invest, existing clients are changing the way they invest.

Wealth managers have gradually reconfigured their business models from product-based advice to portfolio-based approaches that are tailored to risk and performance. This recalibration has shifted financial flows towards fee-based advice. This fee-based advisory model, which includes discretionary portfolio management, represented 40% of total assets under management at the end of 2021, up from 34% at the end of 2016. It is expected to reach 53% of the market by 2026, representing an inflow of around USD 3 billion.

Investment companies specialising in discretionary management and fee-based advice are becoming increasingly common outside the pioneering countries of the UK and Switzerland

This new economic regime and the shift to fee-based advice are driving the adoption of index-based investments (such as ETFs). With increased accessibility, private markets have a growing role to play on a larger scale in portfolios. With increased accessibility, private markets also have a growing role to play. They are even a competitive advantage that differentiates traditional wealth management players, depending on their ability to provide privileged access to private assets and to integrate them into portfolios.

This new holistic approach to wealth management corresponds to the expectations of investors who prefer proposals built around financial objectives. It also means that the scope of advice is expanding to include a wider range of services such as tax and estate planning. Technology simplifies and democratises access to investment by reducing minimum amounts and costs. Investments made through digital channels via neobrokers, neobanks or robo-advisors, reached 1.7 trillion assets under management by the end of 2021 in EMEA. Between 2018-2021, their organic growth was around 15%, showing strong resilience during the pandemic and in the difficult market environment that followed.

In the recent period of low interest rates, many people have moved from being savers to investors, some for the first time. This is particularly noticeable in Germany where, since 2018, assets under management in ETF online savings plans have increased sevenfold.

The recent period has seen the emergence of independent players working both in collaboration and in competition with traditional retail banks and asset managers. The latter are responding by building their in-house capabilities or by partnering with an increasingly broad ecosystem of providers. The most advanced among them are thinking about how to develop a full range of digital and hybrid solutions that combine human advice, digital transparency and an attractive service cost. These propositions will be key to gaining market share in all segments, and in particular the affluent segment, by leveraging their bespoke advice capabilities and portfolio-based offerings.

The new macroeconomic regime is pushing asset managers to rethink their portfolio construction practices, exploiting the efficiency of index investing, selectively choosing tailored active strategies and integrating private equity. They are also rethinking their offerings beyond simple execution to digital and hybrid models. Digitalisation will be a key differentiator.


Portfolio construction and performance requirements are reaching new heights. Wealth managers have two choices: adapt to change or risk being left behind.