The study has received too little attention. In “The looming advisor shortage in US wealth management,” published in February, strategy and management consulting firm McKinsey points to a problem not often made very visible. According to US statistics (and US statistics only), around 110,000 wealth managers and private banking advisors (38% of the total) will be retiring within the next ten years. And according to the firm’s calculations, this will translate into a shortage of 90,000 to 110,000 advisors, from 30% to 37% of the total, in 2034.

How can we explain this almost mechanical effect? The number of people who will need advice will increase by 4% to 5% a year (compared with 0.6% over the last decade), which has already resulted in an increase in turnover generated by the sector from $150bn in 2015 to $260bn in 2024. This will only increase with political and geopolitical uncertainties.

Also according to the same study, whilst it is said and read everywhere that the new generations are very comfortable with their smartphones and apps that provide them with turnkey solutions, the number of these wealthy customers who want human advice has increased from 29% in 2018 to 52% in 2023. More than four out of five would be prepared to pay 50 basis points for this human service (compared with 10 at present). And almost one in three would even be willing to pay 100 basis points or more, which is even more pronounced for those with more than $1m of wealth!

A new team composition

The study suggests a hybrid alternative to the “all-digital” approach, with the creation of “technical” teams around a consultant with recognised expertise: juniors as “rabatteurs” (beaters) with new marketing and networking techniques, ambassadors to qualify the profiles identified by the former, negotiators to finish convincing the profiles qualified by the latter, and technicians working for the consultant to take on board technology and ensure a top level of qualification. Under this scheme, productivity could improve by 8% to 22%, including 7% to 15% for technology (in the preparation of meetings with customers, in the creation of financial plans, in the day-to-day management of customers and in conducting in-depth research into emerging trends and ideas).

Another study, conducted by Capgemini, suggests greater collaboration between family offices, wealth managers and private banks to take the best from the different worlds. “Digitalisation is now the cornerstone of success, the powerful tool that not only builds bridges that were missing, but gives access and drives competitive advantage,” says the second edition of a study conducted by the Luxembourg Bankers’ Association (ABBL) with KPMG, published in January 2025, five years after the first edition.

This is the case for two out of three respondents in the first half of 2024. They acknowledge that few private banks have appointed a head of digital transformation and that they do not have a clear digital transformation strategy, whilst devoting a lot of resources to complying with the Digital Operational Resilience Act (on cybersecurity and resilience) or the European directive on instant payments. Just under half (48%) of private banks do not have enough in-house skills to lead these transformation projects, which explains why almost three out of four have signed at least one contract with a fintech in the last three years--most of them clearly based in Luxembourg... which is not without its own problems around confidentiality or the integration of new technologies.

More than two-thirds of those surveyed have no intention of changing their core banking system, preferring to focus unanimously on improving its efficiency (96%) and 78% on reducing costs. Hyperautomation is not at all popular: fewer than one in ten use a solution along these lines, half as many as those who think it has no added value.

Few new business models

Another aspect: technology is more likely to be used to refresh what already exists than to create a new digital business model (22%) or even to launch new digital products and services (48%).

Is there a lack of desire? Or is it due to the fact that most of the decision-making power lies outside Luxembourg? Around one in five (22%) have total autonomy for digital transformation projects, 26% for initiatives costing more than €50,000, 13% for small initiatives and 13% have no decision-making power at all. On the face of it, the situation is not very positive for the country... except that almost three-quarters (73%) say they make use of the possibilities provided by the group. The same percentage (73%) say they are open to collaborations.

“Luxembourg customers also prefer virtual interactions with their advisors (72%) compared to European customers (49%) when it comes to receiving financial advice. Only 13% of Luxembourg clients prefer face-to-face meetings, compared with 36% in Europe. Wealth managers who make effective use of digital tools are therefore more likely to build lasting and rewarding relationships with their clients,” said EY in its 2023 report on wealth management. This fact is perhaps explained in other ways than in the relationship with technology: Luxembourg has established itself among ultra-high-net-worth clients (UHNWI)--not necessarily in grand duchy--and who go through this channel to take advantage of Luxembourg expertise.

A recomposition to watch

According to Capgemini’s annual report, family offices are demanding sophistication in products and services, and wealth management firms are responding by providing targeted offerings to meet their needs. Here are a few examples.

- HSBC offers elite clients direct access to global markets and investment banking, cementing strategic partnerships with UHNWIs and family offices.

- Citi Private Bank is focusing on intergenerational wealth transfer through its Citi Latitude programme, which serves 1,500 family offices.

- Lombard Odier's Global Assets+ offers operational, investment and banking capabilities to more than 200 clients in single and multi-family offices whilst providing services directly to UHNWIs.

- Northern Trust’s global family office technology suite offers the “Wealth Passport” platform to provide consolidation and greater sophistication to more than 500 clients in single-family offices whilst providing services directly to UHNWIs.

This article was written in  for the  to the  of Paperjam magazine, published on 26 March. The content is produced exclusively for the magazine. It is published on the site to contribute to the full Paperjam archive. .

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