The expectation of more choice and holistic provisioning is often described as the democratization of wealth management: the move toward a world where a wider population is able to participate in investments that, until now, had been the preserve of High-Net-Worth Individuals (HNWIs) or even Ultra-High-Net-Worth Individuals (UHNWIs). To a large extent this trend is driven by the increase in investable wealth available as much as by a digital technology and regulatory landscape that is enabling more choice. Indeed, the number of high-net-worth millionaires has increased by over 11% last year to 62.5 million (see fig. 1), and global financial assets have grown to over USD 274 trillion (2).


Figure 1: Number of millionaires globally

Find out more about how the wealth democratization is changing investor and wealth management behavior in the Wealth Management 4.0 study from ThoughtLab.

Investment democratization crosses the wealth continuum

This drive for more investment choice of course differs depending on where the investor sits on the wealth continuum:

The mass affluent are looking for better access to a diversity of well-regulated investments

In many cases, investment products traditionally the preserve of High-Net-Worth Individuals (HNWIs) are in demand with the mass affluent. This has undoubtedly been fueled by the liberalization of pension and life insurance products in many developed economies, as investors move away from defined benefits schemes and annuities – and make use of tax wrappers, managed accounts, trusts and bond vehicles to manage tailored investment portfolios. Indeed, when one considers the rise of discretionary managed funds, making use of model portfolios and direct indexing strategies in tax-efficient managed account, this trend for low-cost tailored solutions can be viewed clearly.

Nevertheless, outside of long-term pension provisioning, and property acquisition, significant amounts of wealth remain uninvested in deposit accounts (see fig. 2). This is also starting to change. Current inflationary pressures and the search for alternative ways to generate returns and diversify against market risk is opening-up investors to a wider spectrum of wealth opportunities – albeit with a much clearer understanding of underlying costs. Indeed, the long reliance on market-tracking mutual funds is frequently being supplemented by a wider range of products, from lower-cost exchange-traded funds to managed model portfolios, structured products, and alternatives – as well as specific themes such as sustainability.


Figure 2: Percentage of wealth held in deposit accounts (3)

For the HNWIs access to private markets and specialist investment structures are paramount

For the HNWI, the focus is increasingly about getting direct access to illiquid private markets, such as venture capital, private equity, private debt, real estate, and infrastructure projects. Previously these have been expensive to access and service, but changes in legislation and digital technologies are making it increasingly possible to get direct access. It is estimated that private market investments by HNWIs will more than double to USD ~2.2 trillion by 2025 (see fig. 3).


Figure 3: HNW investment in private markets (4)

Wealth managers will need to respond to increasing complexity

The opportunity to grow and scale wealth operations with new product offerings is clear but this puts a heavy burden on systems, processes, and staff. And while regulators are encouraging investment away from cash on one side, they are also getting tougher on compliance. Knowingly overselling, greenwashing, lacking audit trails, and not assessing suitability (e.g., RegBI or MiFID) are a few of the traps that a firm can land in that can lead to hefty fines.

For many firms managing this complexity will present major challenges. Ultimately, providing greater investment choice, means delivering a wider scope of products at less cost. Client facing investment expertise is a precious commodity, and the administrative processes of dealing with a wide variety of investments will become bewildering. For example, managing this complexity in the onboarding, servicing and advising of client investments requires that workflows are properly thought through and joined up.

Overcoming the complexity with a digital wealth platform and ecosystem strategy

Building a digital ecosystem of specialist investment apps, is often cited as a solution to help wealth managers tackle the need for variety and choice demanded by investors. It nevertheless leaves the wealth management firm in the role of choosing best-of-breed IT solutions, and more critically, managing a whole range of back-end IT and operations processes. Unfortunately, today’s hot innovation can frequently turn into tomorrow’s expensive legacy.

An end-to-end digital wealth platform can provide the best of both worlds. By taking care of the whole back-end processing from account set-up to asset processing, a digital wealth platform deals with complexity out-of-the-box. Such a platform can also provide a full range of digital advisory and administration capabilities to cope with a full spectrum of investment products - which can then be customized and personalized as needed. Nevertheless, platforms must also provide easy access to specialist apps, to ensure that local market specifics, points of differentiation and specialist investment types can all be catered for. Dealing with an ever increasing need to deliver on investor choice ultimately means ensuring a platform delivers business agility and openness from day one.

Find out more about how the wealth democratization is changing investor and wealth management behavior in the Wealth Management 4.0 study from ThoughtLab.


1. Anthony Shorrocks, James Davies, and Rodrigo Lluberas, Credit Suisse Global Wealth report (Credit Suisse Research Institute, 2019-21 editions), 9 (2019), 29 (2020), 17 (2021).

2. Anna Zakrzewski et al., Global Wealth 2021: When Clients Take the Lead (Boston Consulting Group, 2021), 8.

3. OECD (2021), “Household financial assets” (indicator), doi: 10.1787/7519b9dc-en (Accessed on December 27, 2021).

4. Kai Upadek et al., Wealth & Asset Management: Competing for Growth (Morgan Stanley and Oliver Wyman, 2021), 11.

5. defaqto (2020)