Wealth management clients are increasingly willing to pay for financial advice as their needs evolve, choosing an average of five providers. However, wealth management apps could "eclipse" traditional channels as clients move towards new technology faster than previously anticipated, new research shows.
The 2019 Global Wealth Research report by EY showed with one-third of clients have switched managers in the past three years, with another 33% planning to change providers in the next three years as no single provider can meet clients' varied needs.
"As the industry grapples with new entrants, new technologies and changing client expectations, wealth managers must take a step back to evaluate their offerings and redefine how they provide financial advice to better meet client needs and expectations," the EY study said. Ernst & Young is a global provider in assurance, tax transaction and advisory services.
As the industry grapples with new entrants, new technologies and changing client expectations, wealth managers must take a step back to evaluate their offerings and redefine how they provide financial advice to better meet client needs and expectations"
The popularity of mobile apps among wealth management clients has increased faster than predicted, with 41% of clients saying they would prefer to use a mobile app over websites, face-to-face interaction and phone calls.
The use of independent advisers and financial technology providers is expected to rise as clients seek more customised services, according to the survey of 2,000 wealth management clients in 26 countries and 50 industry executives.
The number of wealth management clients using fintech providers is also expected to increase from 38 per cent to 45 per cent in the next three years, according to EY.
"This may mean reallocating budgets from websites to voice-enabled sooner rather than later, and capitalising on hybrid models, where clients have access to both digital tools and human interaction."
Despite rapid demand for digital solutions, respondents still desire human interaction. Twenty-five percent of respondents prefer face-to-face meetings or phone calls as their primary method of engagement, and 42% prefer these methods when receiving financial advice.
"As wealth managers prioritize their digital investments across multiple channels, they need to consider how client engagement may evolve in the coming years. This may mean reallocating budgets from websites to voice-enabled sooner rather than later, and capitalizing on hybrid models, where clients have access to both digital tools and human interaction," Nalika Nanayakkara, EY Americas wealth & asset management advisory lead, said.
Overall, 46% of wealth management client respondents said they were unhappy with their fees and do not trust they are being charged fairly, the study showed, with dissatisfaction particularly high at 66% among ultra-high net worth clients.
"Most respondents - 55% - want their wealth managers to use a payment method that offers more transparency, objectivity and certainty," the study said. "Percentage of AUM is currently the most common payment method; however, fixed fee and hourly support methods are most desired."
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