An increasing number of investors are willing to pay for financial advice, but what they value is evolving rapidly. To help advisers understand how best to deliver value, EY surveyed 2,000 wealth management clients across 26 countries to understand what matters most to them.
Here are some interesting findings from the survey:
- The use of independent financial advisers is expected to rise rapidly, with an 18% increase in investors globally who expect to use independent advisers in the next three years, and a 14% increase for independent advisory firms — fuelled by above average growth in Asia-Pacific.
- No single FinTech has been able to acquire a large enough client base to threaten the incumbent dominance yet — though total clients are growing, they still do not typically commit significant assets. The percentage of investors expecting to use FinTech solutions will increase from 38% today to 45% in the next three years.
- There is much incentive to educating clients on the value of financial advice to achieve greater retention — just 20% of clients with “in-depth knowledge” would consider moving their assets elsewhere in the next three years, compared with 40% of clients with low levels of investment knowledge.
- Only 56% of clients say they fully understand the fees they pay. Fee awareness is lowest for older clients and for clients with low levels of wealth or investment knowledge. There is growing concern among clients that fees based on assets under management are not fair. The emergence of less expensive alternatives, such as FinTech and passive investment options, is causing clients to question fees at a growing rate. Clearly communicating services and associated fees is crucial to demonstrating the benefits provided, as well as addressing expanded regulatory rules for greater disclosure.
- Risk-averse clients show a much stronger preference for face-to-face communication than those who are more risk-tolerant (23% vs. 7%). One-quarter of clients currently prefer face-to-face interactions or phone calls as their primary method of engagement; even more clients do so for receiving financial advice (42%). High-touch engagement is especially desired during periods of personal change or significant market turmoil, when clients are looking for a trustworthy advisor to soothe nerves.
- With clients gravitating toward mobile, the preference for first-generation digital channels such as websites has steadily declined since 2016, contrary to what clients had predicted. The future demand for technologies is not restricted to basic, repeatable activities. The preference for chatbots is greatest when seeking financial advice (18%) and learning about products and services (11%), as opposed to making transactions (2.5%).
Access the full study here.
