Personalisation
How complex does it have to be?
2025 is shaping up to be a busy year for the wealth management industry.
In modern society, personalisation isn’t just a “nice to have”. Particularly within younger generations and affluent socio-economic groups, it’s an expectation.
Whether it’s ordering your favourite restaurant meal from the comfort of your own sofa, with the essential exclusion of red onions (because yuck!), or your new phone automatically downloading all of your previously selected preferences, personalisation is now very much the norm in our daily lives.
Even in the notoriously old-school insurance industry, it’s now standard to answer a few self-explanatory questions about your personal situation and be provided with a helpfully curated list of products you can select from to get your perfect cover.
However, when it comes to investing money, the answer still seems to be an off-the-shelf multi-asset fund to suit a handful of risk appetites. Unless, of course, you ticked a box about ethical or sustainable preferences.
15 years ago, before the onset of RDR, all clients had a portfolio manager who’d build them an entirely bespoke portfolio. Now that’s largely the preserve of the higher net worth.This begs the question: does infinite personalisation of the investment portfolio actually improve outcomes?
PersonalisationHow complex does it have to be?
Let’s take a “base case” portfolio designed for your Average Client who wants to grow their portfolio in real terms over 6-10 years. They’ll keep an eye on performance against passive benchmarks but otherwise, they haven’t expressed any other constraints.
Portfolio 1 – 60/30/10
Average Client comes back in a week later and says they’d like to make a few tweaks
The changes that make the biggest difference are (1) risk profile adjustments (common already to have options here) and (2) fundamental philosophical changes to the composition (of which there can only be so many).
Starting portfolio
Tweak 1
Tweak 2
Tweak 3
60/30/10
Risk adjustment (e.g. increase equity)
Asset class adjustments (e.g. remove alts)
Regional adjustments (e.g. remove EM)
Exp Return
Inf + 4.7%
Inf + 5.4%
Inf + 5.1%
Inf + 5.0%
Vol
9.5%
12.7%
12.4%
12.5%
*based on Redington ultra long capital market assumptions, as of 31/3/25
Ultimately, the focus should be on personalisation without bespoking. Central propositions can build in flexibility without proliferation of portfolio flavours and governance complexity.
There are two ways to do this:
Matrix: Core – with left and right levers for risk then up and down levers for the most common philosophical preferences (cost and complexity, perhaps).
Building block: Core blocks created to allow advisers flexibility (within a framework) to combine as required to meet client needs, this approach would mean the investment team can focus on core investment proposition, while advisers have the flexibility to guide clients into a personalised answer.
To put it bluntly, no. Alongside this, clients need personalised communications and content that leverages behavioural insights to influence the optimal outcome.
It’s this that will create the feeling of hyper personalisation the consumer is used to receiving, while offering all the benefits of a robust central investment proposition (with the right number of risk profiles and flavours) that can be well governed.
