Why wealth managers need to change their business models

By International Adviser, 28 Sep 16

Faced with an increasing pressure on margins and the cost of regulatory compliance, EY gives five tips on how wealth managers can change their business models to weather the storm of digital disruption.

3. Demystifying client experience

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Performance

In order for firms to meet differing performance expectations, wealth mangers need to offer a broad portfolio of products, multiple approaches for providing wealth advice (e.g., goals based vs. traditional asset allocation driven) and different channels for delivery (i.e., face to face, phone based or digital).

The challenge is being able to do so profitably and without creating confusion among clients and advisors given the increased complexity arising from such a broad offering.

Engagement

“As wealth managers look to respond to clients’ push for more digital capabilities, some might be tempted to delay or de-prioritize them altogether with the rationale that these are not relevant to them,” says EY

However, given the high-touch nature of wealth management, the research shows that the relevance of digital cuts across age and wealth segments and therefore should not be put on the back burner.

Transparency

Transparency in the digital age is challenging reputation as the main driver of clients’ trust, says EY.

Historically, wealth managers and advisors have relied heavily on their reputation to gain the trust of clients.

Clients said clarity on fees and performance by way of a clear explanation of fees, disclosure of impact of fee changes as real-time performance was the top driver of trust (28%), followed by firm reputation (17%) and advisor reputation (13%).