Australian wealth management clients want custom services and are willing to share data and pay more

The 2021 EY Global Wealth Research Report found that;

  • 72% of Australian survey respondents are willing to share personal data to improve services with their primary wealth manager.
  • 54% of Australian respondents want to consolidate all their financial relationships in one place – across private banking, wealth, insurance and investment services.
  • Demand for purpose-driven investment is rising, with 72% of Australian respondents consider importance of environmental, social and governance (ESG) parameters in their portfolios.
  • Over half (55%) of Australian wealth management clients surveyed are willing to pay more for personalised service, according to new research from EY.
  • At the same time, technology use is also evolving, with 43% of Australian respondents planning to use more digital and virtual tools in future.
  • In exchange for greater personalisation, the majority of Australian wealth management clients (72%) are willing to share personal data with their primary wealth manager.

This is a higher proportion than those willing to share such data with banks, insurers, retailers, technology firms and media platforms.

Due to the COVID-19 pandemic, 32% of Australian respondents expect the relationship with their wealth manager to become less personal from a human interaction perspective.

Based on a detailed survey of 2,500 wealth management clients in 21 geographies, the report uncovers what investors value in their wealth management relationships and how it changes across service models, engagement choices and value-aligned advice.

Continued focus on pricing and value.

  • A majority (83%) of Australian respondents are aware of trading and product fees, yet 29% remain concerned about hidden costs.
  • While this is lower than the global average, where 42% of clients are concerned about hidden costs, there is still scope to continue to improve transparency and education locally.
  • Wealth management clients also want to change the way they pay for specific wealth and investment services.
  • For discretionary wealth management, there is growing preference for performance-based fees (51%), which create a stronger perception of alignment between charges and value creation.
  • However for basic wealth offerings like life goals coaching and portfolio reports, 18% and 27% of Australian respondents respectively expect to receive them at no cost by 2024.

Rita Da Silva, Ernst & Young Wealth & Asset Management Oceania Leader, says: “Perceptions around the value of wealth management products and services are changing rapidly, and experiential factors are increasingly becoming key drivers of pricing.”

“While clients are expecting access to more of their basic services for free, they are still willing to pay extra for a tailored and more holistic experience.”

“Firms will provide curated interaction points, allowing clients to enter the advisor digital spectrum at a point of their choosing, and customise communications to their evolving needs.”

Clients place emphasis on purpose beyond purely financial outcomes.

The research also shows that wealth management clients are looking to build purposeful investment portfolios and wealth relationships.

  • A majority (76%) of Australian respondents have personal sustainability goals, yet 41% feel their wealth manager falls short in understanding their values.
  • At the same time, interest in specific environmental, social and governance (ESG) themes has increased over the past year.
  • A major reallocation of investments could be on the cards with 72% of Australian respondents believing it is important to consider ESG parameters in their portfolios.
  • Impact investing is expected to grow 14% by 2024, reaching an average adoption level of 43% (higher than the global average of 35%).

“ESG factors are clearly becoming increasingly important to Australian wealth management clients in considering their investment portfolios,” Ms Da Silva said.

“Climate change and carbon emissions (47%), better worker welfare and human rights (29%), and air and water pollution (24%) are the top three ESG issues Australian respondents said would be important to have considered or integrated into their future investment portfolios.”

“Wealth managers should consider offering end-to-end ESG investing journeys underpinned by a broad choice of ESG investing options.”

“Tailored guidance, advice, flexible educational options, supplemental research on important topics and clear accountability that links to their wider sustainability strategies will be key.”

Diversity and Inclusion (D&I) are important, as consolidation of relationships gains interest.

  • 54% of Australians surveyed want to consolidate all their financial relationships in one place across private banking, wealth, insurance and investment services.
  • 66% of those who would like to consolidate have yet to choose a sole provider.
  • Among investors who prefer multiple financial providers, 40% say they would pay more to access a consolidated view of their investment portfolios, pointing to a greater need to deliver an ecosystem of financial services.
  • A firm’s diversity and inclusion (D&I) practice is a deciding factor in wealth manager selection.
  • 57% of Australian respondents see D&I efforts as important when evaluating a wealth manager (higher than the global average of 48%).

Firms that fail to demonstrate empathy will struggle to attract new clients and risk losing a significant proportion of existing ones, even as the wealth of women and other under-represented groups is growing globally.

“Wealth managers who are able to personalise products and services, enhance purpose and provide more tailored offerings will become increasingly popular as the demand for more holistic approaches to wealth management rises.”

“The key to achieving this is through collaboration with other providers, from health insurers to competitors, in order to deliver an ecosystem for clients.”

“This will have profound implications for wealth managers’ service models, who will need to decide between becoming a one-stop shop or a specialist provider,” Ms Da Silva said.