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Wealth firms 'still have PTSD from the Royal Commission': Deloitte

To better understand global investor expectations and practices, Deloitte, in partnership with a global marketing agency, developed a report from a survey of 2000 investors and 250 wealth management providers.

The report provided several calls to action, in particularly, an emphasis on placing the investor as the North Star. This approach requires fresh thinking and deeper analysis from wealth firms to adapt to the changing needs and behaviours of investors, and to understand the impact that will have on future propositions.

But Deloitte partner Juanita Knights said at the Stockbrokers and Investment Advisers Association (SIAA) that the Australian industry remains cautious due to the lingering effects from the Royal Commission.

"Firms are very hesitant to think about what the future of advice will look like, particularly in a mass market environment," she said.

However, she added that Australia's regulatory environment and urgent public policies will both play significant roles in shaping the future of financial advice, creating different local guardrails and expectations when compared to the rest of the world.

She said firms have seen significant progress in laying the digital foundations for transformation, with many already seeing substantial benefits from these investments.

"They're seeing strong financial performance and strategic positions have certainly improved," she said.

In Australia, several trends are already in motion, particularly in enhancing the client experience.

"New cohorts of investors are challenging firms to reimagine and reinvent the way that they interact with them. Two-thirds of investors expect their financial services' digital proposition to be on par with what they receive from other leading digital experiences, such as Amazon and Netflix," she said.

For investing in data and AI, 60% of Australian wealth management executives believe that AI will significantly change the way the firms operate, and 70% of these early adopters are seeing improved performance.

When it comes to investing with purpose, despite uncertainty around governance and the impact on investment returns, it remains a high priority, with 50% of Australian firms planning to significantly expand their ESG offerings over the next three years.

However, Deloitte's data suggests that younger investors may not be quite as ready for sustainable investments as previously thought, with only 5% of Gen Y and Z prioritising philanthropic goals.

"Firms may be overestimating the interest of younger investors in sustainable investing," she said.

"Younger investors certainly care about the environment and the planet, but when it comes to their individual wealth creation, there at a stage in life where they care more about their income generation."

Meanwhile, she noted a significant shift among younger Australian considering switching providers. While 69% of recent adviser switchers are baby boomers, reflecting industry consolidation and declining adviser numbers, many younger investors are looking for lower fees and enhanced digital experiences.

Financial Standard is the media partner of the Stockbrokers and Investment Advisers Association Conference 2024.

Read more: DeloitteRoyal CommissionAmazonESGFinancial StandardJuanita KnightsSIAAStockbrokers and Investment Advisers Association Conference