Financial Services firms redesign wealth management spaces for next-generation clients

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Bobby Magnano

CHICAGO– The global wealth management market is poised for exponential growth through 2030, with the human advisory segment leading the way.

According to JLL’s 2024 Wealth Management Branch Benchmarking Survey, financial services firms are transforming their physical spaces to meet the technology-driven, holistic wealth management demands of an increasing number of millennial clients, who are expected to inherit an estimated US$84 trillion+ in assets from baby boomers by 2045.

The research also explores how banking and financial services firms with wealth management branches are expanding into new global and suburban markets, rethinking design and space usage and contending with rising costs associated with rebranding and modernizing.

The traditional investor profile is changing, and this newer, younger, globally connected investor is willing to take on more risk than the baby boomers. They also seek to consolidate their wealth and banking relationships. 47% prefer to work with an investment professional who can holistically meet their financial needs across investments, life insurance, banking and taxes – a 60% increase from 2018, according to a 2023 McKinsey survey.

“As the wealth management landscape is rapidly changing, financial services firms are recognizing that their physical spaces play a crucial role in not only meeting the evolving needs of their wealth management clients but to also align with broader business goals,” said Bobby Magnano, JLL President, Financial Services, Work Dynamics. “Companies are investing in modernizing their branches to provide a superior experience that appeals to a new generation of tech-savvy, sustainability-aware clients.”

As financial services firms continue to increase investment in technology, artificial Intelligence (AI) and automation allow wealth managers to optimize routine tasks and focus on higher-level strategy and client engagement. Wealth management centers then become more than places where clients meet with their advisors; they transform into hybrid environments that blend the digital and in-person experiences, which impacts how firms use their real estate.

Financial services wealth management branches follow the customer

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, and the No. 1 driver influencing location strategy for these new locations is proximity to a new client base (79%).

“Wealth management has been the sleepy backwater of financial services firms’ real estate portfolios for decades,” said Giles Wrench, JLL Vice Chairman, Financial Services and Insurance, Americas. “The research is compelling: 56% of the respondents are either increasing or contemplating an increase in capital expenditure on their wealth management branches, and none are considering a reduction. We’re also seeing a movement of wealth management branches from higher floors often within corporate office locations to more visible ground-floor retail locations affording prominent branding opportunities.”

The research also highlights a growing trend of expansion into major global CBDs and suburban markets, with 43% of firms reported to have already expanded their presence in suburban, non-core locations. While North America is still expected to have the lion share of the $92 trillion global wealth market, wealth creation is accelerating significantly in the Asia-Pacific (APAC) region. By 2028, APAC is expected to contribute 29% of new financial wealth globally.

“Global financial hubs like Singapore, Hong Kong and New York are experiencing growing demand for wealth management services, leading to firms investing in flagship centers there,” said Kirsty Howard, JLL Executive Director, APAC Financial Services Account Lead, Work Dynamics. “Banking and financial services organizations are strategically expanding their footprint to capitalize on growth emerging markets and to meet clients’ expectations for flexibility and convenience; however, they’re doing so judiciously, balancing the need for growth with the challenge of rising build costs.”

Designing for the future wealth management customer

The pressure to differentiate within the wealth management space is intensifying. By 2027, experts predict 16% of wealth management firms will be acquired or exit the market, which is double the historical average. Curating a first-class experience for clients and potential clients is vital for survival, and the physical space plays a key role.

A reported 36% of firms have already undergone design and refurbishing within their portfolio, with 43% refreshing existing branches and 29% opening new locations with updated designs. To provide a premium experience, many new spaces are highly amenitized with hospitality-driven elements such as lounges, wellness rooms, butler services and multi-function and flex-work offerings.

“Financial services firms are redesigning their wealth management branches to appeal to a younger clientele,” said Donielle Watkins, Managing Director and Financial Services Industry Lead, JLL Project and Development Services. “The future wealth management space should deliver a modernized aesthetic with premium materials like leather, marble and natural stone while also incorporating ESG principles, wellbeing and circularity into design. This marks a significant departure from conventional branch designs that featured traditional finishes and targeted a specific type of investor.”

The rising cost of curating a first-class experience for wealth management clients

Inflation and supply chain disruptions have pushed up build costs for redesigning or constructing new wealth management centers. 64% of North American respondents reported substantial increases in build costs over the past two years, with some experiencing hikes of up to 20%. Furthermore, half the firms surveyed anticipate further cost increases of up to 20% over the next 18 months.

To navigate these challenges, many firms are rethinking their investment strategies. According to JLL’s Survey, 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%.

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