New report lifts veil on attitudes toward fees, services, and one-stop wealth management
Around the world, most wealth management clients believe that advisors are delivering well with respect to service – but that doesn’t mean firms can afford to relax.
That’s the message from EY’s latest Global Wealth Research Report, which draws from a survey of 2,500 wealth management clients across 21 geographies.
Validating the role of advisors amid the disruption of COVID-19, three fourths (73%) of respondents globally – including 79% of North Americans – either agreed or strongly agreed that they service they receive is value for money. That result tended to be consistent across all ages, wealth groups, and regions, with Middle Eastern clients being the least satisfied at 62%.
Cost-consciousness rose as 87% of clients indicated they were aware of trading and product fees, compared to just 83% in 2019.
With respect to discretionary investment management, the survey revealed an inclination for fee structures that align cost and value creation. Roughly one quarter of clients (24%) said they preferred to pay performance-based fees, compared to 20% who preferred being billed as a percentage of AUM. Just 14% were in favour of a fixed fee, while 4% were partial to paying per hour of support.
As for advisory investment management services, 12% of clients said they prefer performance-based compensation, and 14% cited AUM-based fees. Fixed fees were favoured by 18%, and 7% said they wanted to be billed by the hour.
When asked to identify factors they would look at when commencing a new service provider relationship, three fifths (57%) cited a strong track record of performance; 48% looked for a competitive fee structure; and 41% wanted a wide range of investment products.
Following the havoc caused by COVID-19, wealth management clients have also tightened their focus on a handful of financial goals. Those include ensuring adequate income and financial security (51%), protecting wealth from eroding forces such as inflation and investment losses (49%), and diversifying total wealth across different asset classes (42%).
Wealth firms shouldn’t expect clients to entrust those wishes to multiple service providers. Nearly half of all respondents globally (49%) said they either would prefer to use or already do use one single financial provider for all their needs. That belief was particularly evident among Canadian participants (56%), as well as North American clients in general (60%).
“Among investors who prefer multiple financial providers, one in four say they would pay
more to access a consolidated view of their investment portfolios, whether via a single provider or an aggregated view,” the report said.
