Wealth management divisions have become an integral part of business models for the majority of commercial banks and non-bank financial institutions in Trinidad and Tobago. Initially created to cater to the needs of institutional investors – particularly those of employee benefit plans – wealth management services have now expanded to include high-networth individuals. T&T’s economy grew at an average rate of 7.5% over the 10-year period leading to 2008, an expansion bolstered by a flourishing energy sector. This growth resulted in significant wealth accumulation and a rise in the number of wealthy individuals. Moreover, the T&T Stock Exchange – measured by the All T&T Index – generated a total return of 154% over the same period, helping to build an emerging wealth class with a preference for privacy and confidentiality.
Today, wealth management lines offer institutions and individuals tailored investment advisory services, including investment recommendations, portfolio management and retirement planning. Some companies that operate in the market also offer tax advising and estate planning.
Assets managed by wealth managers on behalf of individuals and employee benefit plans remain off the balance sheet of managers. As a result, it is difficult to estimate the size and growth of T&T’s wealth management industry. However, the increase in the number of financial institutions offering wealth management services suggests that the segment is growing rapidly. In addition, there has been an increase in the number of qualified investment professionals registered as members of the Chartered Financial Analyst Society of T&T, formerly known as the T&T Chapter of Investment Professionals. The organisation has risen from 70 members in 2017 to 100 members in 2019.
The advent of financial technology is shaping the wealth management industry, causing it to adapt to ever-changing trends in finance. Recently, robo-adviser platforms were introduced to the local market, offering an automated digital approach to portfolio advisory. However, technological innovation has threatened more traditional forms of wealth management with disruption. For example, increased access to online trading platforms afford local investors the opportunity to execute self-directed trading.
However, such independent wealth management introduces a certain level of risk, as not all self-directed investors have the financial expertise needed to make sound and informed investment decisions. As such, there will continue to be demand for wealth managers who have knowledge and expertise to provide financial guidance to investors.
Personal wealth management services also appeal to the conservative nature of local investors, who view trust and relationship as key elements required in managing finances. Most professional wealth managers are committed to continuous professional development, a rigorous ethical code and high standards of professional conduct. Some associations of investment professionals offer access to the latest financial research, thought leadership and continuing educational materials to help members keep up with changes in the financial markets. Access to such resources should enable wealth managers to generate consistent, risk-adjusted returns. Ultimately, it is the client’s returns that measure the value added by professional wealth management.
Wealth management services will continue to be a key component of the long-term business strategy of most financial institutions, and will enable companies to meet the holistic needs of their local and international clientele. Going forward, wealth managers will have to adapt to changes in technology and preferences in order to service clients’ needs in a rapidly transforming business environment.
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