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Clients Want a One-Stop Shop and Zero Cost for Basic Wealth Services

By Ming Li May 21, 2021

A growing number of clients want to integrate all their financial relationships in one place, requiring advisory firms to seek new ways of collaboration, according an EY study.

Nearly half, or 49%, of 2,500 investors surveyed worldwide by EY want to consolidate all their financial activities in one place, according to findings published in April.

Among respondents in North America, 60% want the consolidation, EY says in its 2021 Global Wealth Research Report based on the findings.

More than three-quarters of the respondents worldwide have yet to choose a single provider, according to EY.

“This is a huge opportunity for wealth firms to integrate a full range of financial services, including private banking, insurance, wealth and investments into a single client relationship that can unlock major gains in wallet share,” EY says.

EY, which commissioned research firm Savanta to conduct the survey in October and November last year, didn’t give a breakdown of how many investors were surveyed per region.

The survey findings also show that investors are increasingly focused on value, according to EY.

Around 73% of respondents worldwide said wealth managers are successfully delivering value for money. The percentage is even higher in North America, with 79% of the respondents satisfied.

EY says this “very positive finding” shows that “wealth firms have proven their value by guiding clients” even through the disruption caused by the Covid-19 pandemic.

However, 42% of the respondents worldwide remain concerned about hidden costs when working with their wealth manager, driven by a more anxious younger audience, according to EY. This suggests there is scope to improve transparency, the firm adds.

There are growing expectations for the “basic” elements of wealth offerings to be provided at zero cost, according to EY.

EY says that by 2024, an increasing number of investors will expect free transaction services — such as equity trading — and more than 30% will expect free portfolio reports.

“The good news for providers is that while clients are expecting more for free, they are still willing to pay extra for tailored elements of the wealth proposition. For example, 49% of investors would pay more for increasingly personalized and specialized products and services,” EY says.

“In short, clients’ concepts of value are changing fast. The way firms deliver value must change too,” EY adds. “With basic investment products and services becoming available at very low cost, the ability to deliver tailored experiences is becoming the key driver of pricing in wealth management.”

EY says firms should explore new models of value and establish that they can deliver genuinely differentiated experiences in areas as varied as advisor engagement, tailored products, customized financial education or membership benefits.

Greater integration, more tailored services

Meanwhile, the desire for single financial relationships is twice as strong among the mass affluent group, or those with around $250,000 to $1 million in assets, according to EY. It is also higher among women than men, and more marked among clients with lower levels of financial knowledge.

These variations suggest that different investor groups see different benefits from integrated relationships, EY notes.

“It is likely that a balance needs to be made between delivering the efficiency of a single provider while managing the diversification of risk,” EY says.

“In turn, trust as a strategy is important, with wealth managers and advisors relying on their reputation to gain the trust of clients,” the firm adds.

EY also points out that even if not all investors are seeking a single financial relationship, there’s scope for more firms to act as the primary advisor.

Among investors who prefer multiple financial providers, one in four say they would pay more to access a consolidated view of their investment portfolios, whether via a single provider or an aggregated view.

EY believes advisory firms of different types may build on this opportunity.

Firms will need to convince clients that greater integration will allow them to achieve their goals in an easier, more tailored way, according to EY.

“The key enabler will be a firm’s ability to smoothly integrate a full range of activities for clients seeking a single financial provider, or to provide a clear consolidated overview for those preferring multiple relationships,” it says.

For some providers, the answer will be to enhance their ability to function as a one-stop shop, according to EY.

“But most firms are likely to face tougher choices, for example, between curating a universe of products and services on behalf of clients or becoming a specialist provider focused on a niche investor demographic,” EY says.

EY notes that given the varying attitudes to consolidation among different investor groups, the ability to customize the degree of integration will be essential to success.

“This re-emphasizes the importance of collaboration with other financial providers to ‘deliver an ecosystem,’ and points to the importance of engaging flexibly with clients using multiple channels," EY says.

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