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Wealth managers warned

Wealth managers are being warned that they must adapt to keep customers.

The stark warning comes after an annual survey by Compeer which shows that a third of investors have switched provider in the last two years. What’s more, that the number of investors switching has risen 20% in just three years and that a further 48% are unsure, or likely, to switch in the next 12 months.

The report goes on to say that ss charges become more transparent, investors are starting to consider their options, with a third (36%) of investors saying that they were likely to switch provider if they found the same service for a lower fee. On average, clients who are price sensitive said that they would require a 22% reduction in charges before they were prompted to switch.

Investors are also increasingly expecting to get more out of the charges they pay, with investment performance and a high level of bespoke/individualised service amongst the top five concerns when choosing a wealth manager, adviser or stockbroker.

What are the top three key criteria you consider when choosing a wealth manager/adviser/ stockbroker?

Individuals ranking it 1st Individuals ranking it 2nd Individuals ranking it 3rd Score [1]
Investment performance 221 158 121 1,100
The level of fees for the services 141 175 171 944
A high level of bespoke/individualised service 134 91 88 672
Brand/reputation of the firm 123 96 97 658
The range of the products and services offered by the firm 86 111 130 610

Digital capabilities are a key consideration for many investors, with over two thirds of those asked (66%) rating the digital offering of their main provider as either “good” or “excellent.” Over half (58%) currently access their investment portfolio online and a fifth (22%) via mobile. However, many investors are still slow to adapt a multichannel approach: 43% say that they have access to their portfolio via mobile but don’t use it. For those where a mobile application is not currently available only 21% suggested that they would like one.

Compeer’s James Brown said: “The growing transparency in wealth manager costs and fees has led to an increasing awareness amongst investors. Not only are they watching the money they spend but they are also mindful of the service which they get in return. This growing consciousness, and an increase in investors shopping around for the best deals, provides savvy wealth managers with a growing target market.

“The digital revolution has had a much slower impact in wealth management than in other industries with many traditional firms still struggling to adapt. But with so many investors more empowered to compare and contrast providers, it is essential that wealth managers embrace new capabilities – be that by offering access to portfolios via mobile, or deep-diving into newer, more advanced technologies. Wealth managers need to futureproof now or they risk missing out on the next generation of investors who have grown up organising every aspect of their lives online and are used to that convenience.”

Compeer is a specialist in business performance benchmarking, competitor analysis and research services for wealth managers, private banks and stockbrokers. It surveyed 1,000 end-investors via an online questionnaire. These investors ranged from mass affluent to high net worth individuals.

[1] 3 points per number 1 ranking, 2 points per number 2 ranking, 1 point per number 3 ranking