Financial advisers can expect to lose clients as they search for more flexible solutions and value in their relationships.
This is according to a new wealth management report from EY, which examines why Australians are not leaving their financial advisers solely based on price. Over the next three years, more than one third of clients plan to switch advisers.
The adviser's reputation and servicing capabilities in areas such as advisory services, personal attention, quality, products and technology are also driving clients' urge to find the right relationship.
In searching for value, clients are forming relationships with multiple providers and feel their needs are not met by a single adviser. EY found clients have five different types of providers on average.
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Interestingly, Australian respondents said they are more likely to trust they are being charged fairly and understand how their adviser is compensated compared to global counterparts.
Almost three-quarters (71%) said they have a good understanding of fees charged: a percentage calculated on the AUM and hourly support are currently the most common payment methods. However, many clients indicated they preferred fixed-fee models.
"As the industry grapples with new entrants, new technologies and changing client expectations, wealth managers need to take a step back to evaluate their offerings and redefine how they provide financial advice in a way that better addresses clients' needs and expectations," EY said.
The research forecasts the use of independent advisers and independent advisory firms are expected to rise over the next three years at 73% and 93% respectively.
"While this significant swing towards independence suggests the flexibility in solutions and fees being offered is becoming more attractive to clients, it may also be reflective of the public and regulatory scrutiny of the wider sector in the wake of the Royal Commission," it said.
EY Oceania wealth and asset management leader Antoinette Elias said wealth managers recognise their clients now expect more than just strong investment performance, but they are struggling to differentiate and communicate the value of their offerings and services in an increasingly crowded market.
"The answer is not simply in lowering fees, but rather a combination of increasing transparency and predictability in pricing models, and equipping advisors with ways to communicate value beyond investment returns."
EY's 2019 Global Wealth Management Research Report surveyed 2000 advised clients across 26 countries.