Wealth managers have an urgent need to improve their client service with some 33% of customers switching firms over the last three years and a further 33% expected to do so in the next three years, according to a report.
Professional services business EY made the claim in it latest Global Wealth Research report, which examined the views of 2,000 wealth management clients in 26 countries.
It found nearly half of respondents (46%) are unhappy with the fees they pay and do not believe they are being charged fairly, with dissatisfaction at a high of 66% among ultra-high net worth clients.
EY said 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”.
This is even more apparent as the survey also found 45% of respondents expect to use fintech-based wealth services in the next three years, a rise from 38% today.
Clients demand alternative pricing models
Key for wealth management firms keen to retain clients is to deal better with explaining their charging structure, EY said.
Most clients (55%) want their wealth managers to use a payment method that offers more transparency, objectivity and certainty.
A percentage fee based on total assets under management is currently the most common payment method used by the industry, however, fixed fee and hourly charges are the most desired by clients.
Alex Birkin, EY global wealth and asset management advisory leader, said: “Wealth managers realise that clients expect more than just strong investment performance but struggle to communicate the value of their offerings and services.
“The answer is not simply lowering fees, but rather a combination of increasing transparency and predictability when it comes to pricing models and equipping advisers with ways to communicate value beyond investment returns.”
Planning not part of the conversation
The report also said wealth managers are also overlooking their value in offering robust advice, and planning and budgeting services in a bid to keep clients.
More than 80% of respondents to the EY survey expressed an interest in advice and planning services, but fewer than 40% utilise them currently.
Additionally, just 28% discuss saving with their wealth manager.
Birkin added: “Beyond the everyday and specific targets, clients aspire to reach a level of independence where their money empowers them, whether it helps to remove worry or achieve a greater purpose.
“Wealth managers must redefine the value of financial advice by focusing on the intangibles – those solutions with less measurable or quantifiable benefits, but which improve their clients’ day-to-day lives.”
Technological desire
The study also found firms will have to adapt their business to suit their client’s desire for better digital communication.
Some 41% of respondents preferred mobile apps as their primary channel for wealth management.
When it comes to emerging technology, 1.4% of respondents prefer digital and voice-enabled assistants as a primary channel today.
However, 9% said they would prefer this channel in the near future.
Respondents still desire human interaction as 25% of respondents prefer face-to-face or phone calls as their primary method of engagement, and almost half (42%) prefer these methods when receiving financial advice.
Nalika Nanayakkara, EY Americas wealth and asset management advisory lead, said: “As wealth managers prioritise 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 technology sooner rather than later, and capitalising on hybrid models, where clients have access to both digital tools and human interaction.”
