Financial services firms rethink their wealth management strategies

• The ongoing transfer of wealth from baby boomers to millennials is reshaping how wealth management firms operate in their physical spaces as younger clients demand tech-driven, holistic financial services.
• Wealth management firms are expanding into major global CBD’s and suburban markets to capitalize on growing wealth, particularly in Asia-Pacific, and to meet clients’ expectations for flexibility and convenience.
• Rising build costs and increasing competition are forcing firms to be strategic about their real estate investments, with a focus on rebranding and modernizing branches to appeal to younger, tech-savvy clients.

Client preference for holistic advice continues to increase, and is even more prevalent amongst younger investors

% of respondents who indicate that they "prefer to work with an investment professional who can holistically answer my financial needs across investments, life insurance, banking and taxes"

^{Source: McKinsey Affluent and High-Net-Worth Consumer Insights Survey 2023 (n=-7,000)}

The traditional stock market schedule no longer constrains trading and investment activities. The emergence of fintech and cryptocurrencies has intensified the demand for swift, round-the-clock money transfers to capitalize on market indicators.

The younger generation of investors are more globally interconnected than ever. A single social media post, whether from a financial influencer on Weibo or a Reddit thread propagated by a certain transit-focused billionaire, can trigger a surge in investment activity. Social influence and the dream of instant wealth now wield unprecedented power over investment behavior.

This shift has placed significant pressure on conventional wealth management firms seeking to boost profitability and gain the confidence of newly affluent clients. As a result, these firms are compelled to diversify their services and move away from the traditional, austere ambiance that once characterized this asset class.

Financial services firms are rethinking their real estate strategies as technological innovation, a generational wealth transfer and a new cohort with exacting standards is shifting how and where wealth managers operate.

From expanding into emerging wealth hubs to reshaping aesthetics of wealth management environments to entice modern investors, financial services firms are aligning their wealth management real estate portfolios to meet the changing demands of the market.

One of the biggest forces driving change is the ongoing transfer of wealth from baby boomers to millennials. By 2045, more than $84 trillion dollars is expected to change hands in the U.S. alone, presenting a massive opportunity for wealth managers.

However, millennials have different expectations than their parents and are more willing to take on some risk versus baby boomers who are looking for a lower risk return.steady, sure thing. The demographic of investor profile is also shifting as many of these spaces were historically designed for men, but now women and minorities are emerging as strong investors to capture.

Younger clients demand tech-driven, integrated financial services that combine real-time digital and in-person expert advice. They are also looking for investments in emerging areas such as environmental, social, and governance (ESG), digital assets like cryptocurrency and private market investments. This shift is forcing firms to rethink how they present their brand through new services.

A 2023 McKinsey & Company study reveals that  nearly half (47%) of wealth clients prefer holistic advice across adjacent needs in 2023 up from 29% in 2018. Younger investors are even more interested in holistic advice with 73% of clients between the ages of 25 and 44 preferring to consolidate their wealth and banking relationships, up from 20% in 2018.

Traditionally, wealth management branches have been portrayed as exclusive spaces that only few could access, fast-forward to today where the emergence of digital-native investors has shifted designs akin to more of a welcoming social wealth club.

Some firms have already responded to this trend, according to JLL’s 2024 Wealth Management Branch Benchmarking Survey, which reveals that 36% have re-designed real estate within their existing portfolio; of which, 43% have refreshed existing branches to appeal to this new demographic, and 29% are opening new locations with an updated design. A further 7% of organizations have plans to rebrand their space in the future.

These refreshed interiors are a departure from traditional aesthetics. To appeal to the new generation of clients, organizations are moving away from traditional finishes in their branches in favor of higher-end materials such as leather, wood, marble, granite or natural stone.  Nearly half (43%) of respondents have made changes to the base material palette of their properties in the last five years.

Challenges of build costs

Growth in Asia-Pacific to accelerate

AI Integration and WealthTech

Digital and in-person advisory services

The importance of an inviting space is clear but wealth management clients are also looking for seamless integration between technology and human advisory services, and firms are redesigning their real estate to match with a focus on digital enhancements.

Although robo-advisors are becoming more prevalent, it complements—rather than replaces—human interaction. Clients are particularly wary of the risks associated with online investing advice due to the surge in financial scams, but they increasingly expect hyper-personalized services, which require a blend of digital tools and expert advisors, In fact, according to the Bureau of Labor Statistics (BLS), employment for personal financial advisors is expected to grow by 13% between 2022 and 2032, outpacing both financial specialists (+5%) and all occupations (+3%), further reinforcing the need for asset managers to adapt their spaces.

Despite some market caution, investment in technology is accelerating and spending on technology has outpaced revenue and cost growth in the industry over the past five years — with a big jump in 2022 (19% year-on-year).

AI and automation allow wealth managers to optimize routine tasks and focus on higher-level strategy and client engagement. As such, wealth management centers are no longer just places where clients meet with their advisors, they are becoming hybrid environments that blend digital and in-person experiences, which impacts how firms use their real estate.

According to JLL’s 2024 Wealth Management Branch Benchmarking Survey, the traditional location for wealth management branches remains above the ground floor, co-located with office space. However, new ground floor standalone space, co-located with retail bank branches, are growing in popularity. In addition, open concept branches and boutique formats will support this hybrid model and appeal to new customers.

In the market already, JPMorgan Chase has integrated AI-driven tools into its wealth management services to optimize client interactions, while Citibank's Wealth 360 app offers clients the ability to manage their finances digitally, complementing in-person services.

Beyond refurbishing existing spaces, wealth managers are expanding their presence in key markets where wealth creation is accelerating.

By 2028, the Asia-Pacific region is expected to contribute nearly 30% of new financial wealth globally and more than a third (36%) of firms plan to increase their number of wealth management locations by up to 10% over the next five years.

Cities like Singapore, Hong Kong, and New York are seeing surges in demand for wealth management services, prompting firms to invest in flagship centers in these financial hubs. For instance, HSBC recently opened a wealth management center in New York’s Hudson Yards and recently announced its plans to open three wealth centers in Singapore by Q1 2025. In February 2024 Citibank announced the opening of two new wealth management hubs in Singapore and UBS is intensifying its focus on Asia following the acquisition of Credit Suisse.

The rise of remote work and changing client behaviors are leading firms to explore suburban locations as well. Offering clients greater convenience in the places they live and work is increasingly important with 43% of firms having already expand their presence in suburban, non-core locations.

Despite the increasing trend to rebrand, many organizations may find it more costly to refurbish  or construct new wealth management centers due to inflation and supply chain disruptions, which have pushed up build costs.

In the survey, 64% of respondents from North America reported substantial increases in build costs over the past two years, with some experiencing hikes of up to 20%. Looking forward, half of the firms surveyed anticipate further cost increases of up to 20% over the next 18 months.

At the same time, competition within the wealth management space is intensifying. By 2027, 16% of wealth management firms are expected to be acquired or exit the market—a rate of industry consolidation that is double the historical average. This growing pressure is pushing firms to differentiate, not only through their service offerings but also through how and where they engage with clients.

To navigate these challenges, many firms are rethinking their investment strategies. Half plan to maintain stable levels of capital investment in their real estate portfolios over the next three years while 28% plan to increase investment by up to 20%.

Financial services firms are not only meeting the evolving needs of their clients, they are using real estate to align with broader business goals.

The great wealth transfer presents a huge growth opportunity and, combined with the rise in wealth in Asia-Pacific, firms are optimistic about growth. Many are already making changes to their portfolio strategies by increasing the number of locations, overall portfolio size and headcount in the next five years.

This new generation of customers expects tech-enabled services that deliver a highly personalized and seamless experience across physical and digital touchpoints, as well as branches in major CBDs and suburban core and suburban non-core locations.

• Millennial expectations are also likely to spur further demand for new branch concepts that have ESG, wellbeing and circularity at the heart of their design.
• Leading firms will need to provide a wide range of in-branch amenities to provide a first-class experience, complemented by new fit-out palettes and finishes. Technologies such as motion and heat sensors will provide data on space usage, allowing firms to optimize their space usage.

• However, to counter higher build costs, pre-procurement practices will play a vital role as companies look to mitigate the impact of price fluctuations. Teams must engage with their main contractors and real estate advisors early in the process and undertake robust risk assessments pre-tender to help to identify potential risks, together, these changes will enable leading firms to offer something all clients demand – a superior experience in-branch or otherwise.

JLL’s first Wealth Management Branch Benchmarking Survey 2024, assesses wealth management organization’s current and future policies around portfolio and strategy, design & space usage and capital investment. The survey was completed by JLL Financial Services Account Directors on behalf of their clients in August 2024 and represents 13 wealth management organizations globally.