Not all emerging markets are created equal; which is why it is almost impossible to extrapolate insights into unique regions such as Asia, Africa or Latin America onto another part of the world. Similarly, it is unwise to assume that trends in one African country can be applied to the other 53 nations with equal relevance.
There is, however, always a possibility to take lessons from markets at similar stages of development. This is particularly true of the wealth management sector which must adapt to the evolving needs of wealthy individuals and be open to the use of new technologies and ways of thinking.
In 2016, professional services firm PwC released a ‘Sink or Swim’ report which highlighted digital uptake among high-net-worth (HNW) Asian clients as being key to the evolution of wealth management services in the region. In the report, PwC’s Justin Ong noted that wealth management “remains as one of the least tech-literate sectors of the financial services industry”.
Noting the need to move away from a transactional focus in the region and focus more on building relationships grounded in trust and advice, Ong wrote: “There has never been a more serious call to action and wealth managers need to get to grips with the fact that HNWIs have moved on. Telling themselves that clients’ don’t want to change, or prefer not to use technology, is a loser’s game. Getting up the curve on digital and technology to create and enhance the client proposition is ultimately the key to survival, and those who prefer to keep their heads in the sand will find themselves sinking ever deeper into the quagmires of yesterday’s quicksand.”
What’s the case in Africa?
Comments like these do have some crossover into the African market, believes Anthony Palmer, Group Commercial Director at Carrick Wealth. “I think Africa is where Asia was 10 to 15 years ago,” he says. “There is a huge opportunity to provide quality wealth management and financial planning. Technology will play a critical role and will certainly separate the winners from the losers.”
Palmer adds that Carrick Wealth’s differentiator is already grounded in a combination of personal relationships and technology, partly because, in Africa, relationships and trust “are still extremely important”.
What do Africa’s wealthy want?
According to the Africa Wealth Report 2021, released by New World Wealth and AfrAsia Bank Mauritius in April 2021, total private wealth in Africa is expected to rise by 30% over the next decade, “reaching US$2.6 trillion by 2030. The growth will be driven by the billionaire and centi-millionaire segments in particular.” Centi-millionaires are defined as those individuals with net assets of US$100 million or more, and billionaires as those with net assets of US$1 billion or more.
Individuals in this wealth bracket, whether they are from Kenya, Ethiopia, Mauritius, Zimbabwe or South Africa are, says Palmer, hungry for advice – particularly when it comes to expert insights that affect estate planning, tax planning and asset protection.
“The actual investment process can be automated to a large degree, but certainly not the structuring aspect,” he explains. “Also, we’ve found that HNW individuals really value being able to pick up a phone and speak to their advisor. I don’t see that changing, since African clients all have unique needs and at the end of the day want to speak to someone they trust; someone who is an expert in the field.”
While this talks to the need to remain in step with client needs, as the ‘Sink or Swim’ report noted it is equally important that wealth management firms do not drop the ball when it comes to making effective use of technology to supplement their service offering.
Keeping it current
“We are constantly working on improving our offerings from a product perspective,” explains Palmer of the Carrick Wealth approach. “From reaching clients to processing cases to our concierge service where clients can log on and have real time valuations.”
For instance, he adds: “Covid-19 has been a strong catalyst for companies to realise how much can be done on DocuSign [the digital signing of agreements and contracts etc] and has forced certain product providers to adopt new internal policies and procedures to allow for DocuSign and to do away with the archaic need for original documents and wet ink signatures. There are also new technologies for online verification [such as FICA which is required for the South African market] which we are looking into but have not yet adopted. The ultimate goal is to go paperless.”
This approach, as the PwC paper suggests, is both in step with the evolving needs of clients and highlights the advantages Africa’s wealthy can enjoy from working with an organisation that taps into the very best of digital technology.