Report Summary: Clients are Now Looking for Value More than Just Building Wealth (EY)

EY recently surveyed 2,000 clients of wealth management firms across 26 countries to identify what they value the most in a provider. Results show that while wealth management continues to increase in demand, clients are looking for firms that will help them more than just saving money.

Wealth management advice often focus on achieving specific goals and objectives: saving money for college, retirement, real estate, or business, to name a few.

Fig. 1. Reasons why clients use wealth management advisory services

However, these points represent only a part of the client’s financial life. What clients need is help with the management of their day-to-day finances and guidance in their aspiration to achieve a certain level of financial independence. Wealth management providers who understand how to enable these desired outcomes are able to develop a better relationship with their clients; those who don’t risk clients switching to another provider.

Clients look for wealth management firms which can best provide value to their lives. Of these clients, millennials are the ones who are more likely to switch providers compared to boomers. Reasons for the switch in wealth management plans vary depending on the life event the client is undergoing.

Fig. 2. Events that cause a client to switch providers

Not everyone easily switches, though, even when they’re experiencing the situations mentioned. Those who belong to the wealthiest cohorts and those who have a better knowledge of their finances have lesser chances of moving their assets to another firm because they understand the value their providers are giving. They just open a new account with another provider when they have additional assets that need professional management. On that note, clients have been found to use an average of five different wealth management providers, seeing that a single provider cannot provide all the solutions they’re looking for.

Clients who have a higher risk tolerance and more in-depth knowledge of finances are more open to trying a breadth of different products to achieve better returns. From having a savings and retirement account to a micro-investing account with a FinTech company, financially aware clients have assets diversified between five different providers on average.

Although there’s a clear demand for wealth management firms to expand their range of products, most participants reveal that it’s more important to them is for providers to develop a personal understanding of their financial lives. Firms are expected to have a deeper engagement with clients in order to build a full picture of their life goals, and then shape offers into timely solutions that will meet their needs.

Digital innovation has changed the way wealth management services are delivered. Clients now prefer the convenience of using mobile apps to manage their wealth and receive financial advice. While wealth management companies are able to provide this, delivering personalised solutions still remains to be a challenge.

Fig. 3. Platform preference for interaction

Many clients feel they’re being charged unfairly by their wealth management providers. Transparency on pricing and fees is one of the main factors clients consider in evaluating providers. Clients who are wealthier, younger, and more knowledgeable financially are the ones who often express dissatisfaction in the predictability and transparency of management fees and payment methods. The emergence of FinTech solutions, which prove to be more affordable alternatives, makes customers question traditional wealth management providers more on why they can’t do the same to their fee structures.

But clients aren’t simply asking for lower fees. What they want is a justification of how fees are derived, coupled with tangible outcomes from being guided towards their budgeting or estate planning goals. Clients are also looking for a payment method that will offer better certainty and predictability like fixed-fee or per-hour charging models. Clients who desire this kind of payment model said that this will help them lock in costs and provide better objectivity in their financial decisions.

The good news is that wealth management firms are hearing customer concerns and are working on solutions to provide a simpler, more convenient, more cost-effective, and more personalised offer to clients. Using mobile and automated technologies, wealth management providers are expected to be able to increase the value of their offers without raising costs.

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