A growing number of corporate clients offering asset management services are willing to pay for financial advice, but their value added expectations are changing rapidly.
As a result, 33% of clients of such companies have changed supplier over the past three years, and a similar percentage intends to do the same in the next three years, according to the EY - Global Wealth Research report, 2019. The report aims to explore how clients value services provided by asset management companies and aggregate the responses of a survey conducted among 2,000 clients using asset management services and the conclusions of discussions with 50 executives in this area.
Since no vendor can fully meet the various needs of respondents, asset management clients collaborate on average with five different vendor types. As the industry faces new competitors, new technologies and changing customer expectations, service providers need to evaluate their offers and redefine how they provide financial advice.
An increase in the use of the services of independent consultants and FinTech companies is expected. According to the study, over the next three years, an 18% increase is expected in accessing the services offered by independent consultants, suggesting that the flexibility of their solutions and tariffs is more attractive to customers.
Similarly, the percentage of respondents intending to use FinTech companies' services is estimated to grow from 38% today to 45% over the next three years.
Although these newcomers manage lower-value assets, the study indicates that the number of respondents using services through FinTech is similar to that of respondents who are turning to well-established wealth management institutions.
Respondents are turning to smaller and more agile providers (especially FinTech companies and independent consultants) to benefit from personalized solutions. The study shows that traditional asset managers should take this into account and come up with suitable deals, such as anticipating major events in customers' lives and adapting to them proactively.
The preferences for emerging technologies exceed the 2016 forecasts
And digital channels are evolving faster than real estate managers and their clients anticipated three years ago. In 2016, only 20% of clients predicted they would choose to use mobile applications for asset management activities until 2019, while the current study shows that 41% of respondents prefer these applications as the main asset management channel.
With regard to new technologies, only 1.4% of respondents currently prefer digital assistants and voice activation as the main channel. But 9% of respondents said they would choose this channel in the near future.
It is possible, however, that these figures significantly underestimate growth potential, as was also underestimated for mobile applications in 2016.
Despite the rapid growth in demand for digital solutions, respondents want human interaction. 25% prefer face-to-face or telephone conversations as the main method of interaction, and almost half of respondents (42%) prefer these methods when it comes to financial consulting.
Customers are demanding alternative pricing models
Almost half of respondents to wealth management clients (46%) are unhappy with the charges they pay. They do not consider that they are being charged correctly, and most discontent comes especially among clients with very large patrimony (66%).
Most respondents (55%) want their wealth administrators to use a payment method that offers more transparency, objectivity and certainty. The most common payment method is currently a percentage of managed assets. However, the most desirable methods are those based on fixed rates and hourly rates.
Half of respondents do not use consultancy and planning services
Providers of asset management services lose sight of the value of their consulting, planning, and budgeting services. More than 80% of their clients express their interest in consultancy and planning, but less than 40% are currently using them. In addition, only 28% of respondents discuss savings with their wealth manager, although this is an opportunity for providers to talk about daily budgets.
"Customers aspire to achieve a level of independence in which money is either a way of eliminating tomorrow's care, or a means of achieving a more important goal.
Providers of asset management services need to redefine the value of financial advice, focusing on intangible aspects, that is, those solutions that are less measurable or measurable, but which improve the daily lives of their clients, "says Alex Birkin, coordinator global Wealth & Asset Management Advisory within EY.