Wealth managers shouldn’t give up on retaining current clients and acquiring new assets–even while they’re struggling in the face of competitive threats such as robos.
Read: Advisors’ jobs aren’t the only ones at risk of automation
That’s because, on a global scale, as much as US$200 billion in revenue is up for grabs, according to EY’s 2016 global wealth management report. However, this is partially because three out of ten clients surveyed in Canada are open to switching wealth managers under the right circumstances.
In particular, clients value strong investment performance and advice, and are looking for advisors who offer personalized service along with digital tools. These investors want to do business on their own terms and at times that are convenient for them, the report notes, and they appreciate discussions and documents that are easy to understand.
Read: Knowing, communicating and pricing your value: part 2
Many clients are also wondering whether their advisors have their best interests in mind, says the report, especially in an environment where firms are striving to flourish and compete. As the report notes, “50% of wealth managers interviewed globally will focus on revenue growth as their top priority in the next two to three years.”
“Retaining clients will become a high priority for firms, given the increasing awareness around robo advisors and new advice models,” says Gregory Smith, EY’s Wealth Management Advisory Leader. “Wealth managers need to engage their clients more than ever [as well as] increasingly use digital technology.”
Read: Robos becoming more ambitious, says expert panel
Across the globe, wealth managers need to work on three areas, says EY. These are:
- Transparency. Clients are questioning the transparency of portfolio performance and fees, so they’re eager for discussions around these topics. Investors would also like to rate their advisors and connect with clients in public forums.With rules like CRM2 and best interest standards coming into play, advisors need to focus on boosting transparency and communicating their value. Read: CRM2 is here. Are you ready?
- Technology. Clients are more open than many firms to adopting digital technology and channels. So advisors should make sure they’re offering the optimal wealth advice model, says the report.
- Defining the role of advisors. Financial advisors may become much more like therapists and life coaches in the future, helping clients with cash flow planning and overall financial goals. Those who strictly provide basic services that could be automated will be at risk—also consider that CSA is proposing heftier disclosure for firms offering only proprietary product.
Read: What the CSA’s bombshell proposals mean for you
Traditionally, advisors were able to prove their worth based on their reputations, says the report. But that’s changing and you need to be ready to meet clients’ evolving needs.
For client-service tips, read:
Clients say their advisors fail on goals-based investing
Five ways to navigate blended-family finances
CSA extends best interest standard comment period