If you quit your firm most clients will follow you to your new one

Study of investors and wealth management firms reveals trending client expectations

If you quit your firm most clients will follow you to your new one
Steve Randall

With competition in the wealth management industry higher than ever, the value of great client relationships can’t be overlooked.

Today’s investors have many options and will consider many factors including product range, fees, and technology when deciding on a firm to work with – and whether it’s time to switch.

But a new international study of investors and wealth management firms by ThoughtLab Group also highlights the importance of individual advisors with 61% of respondents saying they would be likely or very likely to switch firms to follow their advisor.

More than 4 in 10 respondents said that they plan to change providers in the next two years to find what they want while one third have already shifted at least 20% of their funds for this reason.

Clients have several requirements when deciding whether a firm is meeting their needs – and changes being seen are happening fast.

“In our many years of conducting wealth management research, these investor shifts are the most dramatic seen,” said Lou Celi, CEO of ThoughtLab and the director of the study. “Investor shifts that would have taken years to play out are happening in months.”

Technology plays a key role with 9 in 10 expecting mobile to be their preferred channel in the future, not just for millennials but for older and richer investors too.

When selecting a new firm investors use ESG criteria with 48% considering ethical business practices, 41% vision and integrity, 39% approach to inclusion, and 34% social purpose.

Purpose and alternatives

Purpose is increasingly important and over the next two years more than one third of investors will seek ESG investing advice. Again this is no longer a trend dominated by millennials with 32% of boomers planning to invest in ESG funds vs. 22% of millennials and 63% of billionaires.

Alternatives are gaining ground with two thirds of respondents wanting to invest.

Personal financial planning is a focus for 58% of investors and 53% are interested in day-to-day financial management services. These percentages are similar for both mass-affluent respondents and verh-high-net-worth individuals.

Only 37% of investors are happy with provider’s fees, and 36% with fee structures. Even fewer, 35%, understand how their advisors are compensated. Regulators and fintech competition are adding to the pricing pressure.

To succeed, wealth and asset management firms will need to shift from a product- to a customer-centric approach - focusing on the person, not the demographic.

Firms will need to reimagine their client segmentation and go-to-market strategies, as well as their range of products, services, and pricing models.