EY’s 2023 research report on global wealth management is headlined “When volatility causes complexity, how can wealth managers create opportunity?” Complexity, in its guise of diversification, is lauded as one of the achievable free rides in investment management, so where are the difficulties here?
EY attributes the apparent complexity and volatility in the macroeconomic environment to the oft-cited economic and geopolitical tensions, as well as technological change and rapid developments in investment management itself.
The firm surveyed over 2,600 wealth management clients in 27 global locations. The findings suggest the clients are eager for help in navigating current market complexities. But they are also looking for more individual empowerment through interactive and personal relationships. And they want to receive transparent, provable value.
The report highlights some eye-opening figures for incumbent wealth managers. Some 44% of clients plan to change provider relationships in the next three years: 21% by moving money, 14% by adding another provider, and 9% by switching providers completely. What’s more, 56% are looking to move more than one-quarter of their assets.
The figures are even more alarming for the newer wealth management regions, with 62% of Latin American, 59% of Middle Eastern, and 57% of Asia Pacific clients looking to shake up their management relationships over the next three years.
So if you’re an incumbent wealth manager in Asia Pacific, over half of your clients will be shuffling things or leaving within the next three years.
One common factor looks to be the effect of technology rather than changes in financial markets.
When younger – but fast maturing – wealth management clients are conducting much of their social lives and personal arrangements online and in real time, and are used to accessing information spontaneously, why shouldn’t they expect their wealth management services to keep pace? Especially when, post-pandemic, teleconferencing has become a norm in business processes as well as personal interaction.
Wealth managers may need to change their procedures and approaches simply because this is how people interact and engage nowadays. These networks also give wealth managers opportunities to go the extra mile in personalised, transparent services – or lose out if they don’t.
Perhaps wealth managers might find the modern world less complex if they adjust their internal cultures to actually living in it.
