EY wealth research suggests firms need product breadth and qualified advice to retain and attract clients
Given the wide-reaching impact of the coronavirus pandemic, the competition for client assets among Canadian wealth firms is as fierce as ever. And according to research from EY, firms that want to emerge successful will have to work hard and demonstrate value.
Deriving Canada-specific insights from its recent Global Wealth Research report, EY said one in five Canadian investors (21%) are planning to switch firms in the next three years. That’s only slightly less than the 23% of investors who said they’d switched firms in the past three years.
The most-cited reasons for investors to move were investment performance and changes brought on by the pandemic, which were tied at 26%.
"Perceptions around value for wealth management products and services are rapidly changing," said David Hurd, EY Canada National Wealth & Asset Management Leader. "Firms will need to show the best kind of value for the right user to retain their existing clients, and attract those on the move from their competitors."
Among the Canadian respondents to EY’s research, the majority use 4.1 investment products on average, and around half of investors said they prefer to have a single-source financial services provider. At the same time, low costs and experience-related factors are leading an increasing share of respondents to expect to pay nothing for offerings such as standard investment products and trading transaction services by 2024.
Hurd said that three quarters of Canadian investors were satisfied that their advisor gives them value-for-money service, around 40% shared lingering concerns about hidden costs when working with their wealth manager, indicating that firms can still do more to build client loyalty through transparency and education.
Beyond the question of fees, the survey found that 56% of Canadians are expecting to use more digital and virtual tools going forward, such as robo advisors or chatbots. At the same time, there are still expectations for deeper insight from real, qualified advisors, and that need rises as one goes up the wealth spectrum. The upshot is a near-equal proportion of clients wanting an advisor-led relationship (35%) and a hybrid-led relationship (38%), leaving roughly one in five (22%) saying they want a digital-led relationship.
The poll also revealed three quarters (73%) of Canadians have set personal sustainability goals, and three fifths (60%) indicated said they plan to engage in philanthropy by 2024. However, Canadian investors as a whole are not prepared to sacrifice their bottom-line results for the sake of ESG, and around half feel their wealth manager is not perfectly understanding their ESG values.
“Digging into what your investors expect in terms of products, services and ESG offerings, can lead to richer client conversations, ultimately cultivating the kind of loyalty capable of bolstering bottom-line results and achieving long-term purpose goals,” Hurd said.