EY Global Wealth Survey: Volatility and uncertainty prompt wealth management clients to reallocate assets and increase demand for advice

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• Generations react differently to market volatility and uncertainty: The need for holistic and differentiated advice increased significantly. Wealth managers are under pressure to “do more for less”.
• 47% of the private investors surveyed in Switzerland say that wealth management has become more complex in the last two years. This is an opportunity for wealth managers – if they can overcome associated operational challenges
• Despite increased complexity and volatility, 68% of respondents believe they are well prepared to achieve their investment goals.
• In Switzerland, the need for seamless enabled hybrid advisory experience reached a new high. In financial planning (38%), investment management (45%) and account management (40%), a large proportion of respondents believe they no longer need local contact.

Zürich, Tuesday, 25 April 2023 – Recent events and developments in the international financial markets led to increased volatility and uncertainty which also has an impact on wealth management clients. In search of trust, wealthy private investors are more open to relocate their assets to more established financial service providers and bigger banks in the expectation of more secure investments. “The Swiss financial centre remains strong. Well-capitalised and stable banks have retained the trust of their clients and have managed to attract new ones. However, trust can be easily eroded. Preserving this trust must be the ultimate priority for wealth managers”, says Raphaël Thürler, Wealth & Asset Management Sector Leader and Financial Accounting Advisory Services Leader in Financial Services at EY in Switzerland.

The appetite of European ‘millennial’ investors (those born between 1981 and 1996) to make riskier investments amid market volatility is higher than the generations above them, as younger investors more actively respond to and are influenced by external market events.

These are some insights of the EY Global Wealth Survey, which surveyed over 2,600 wealth management clients globally, including 600 across Europe, including Switzerland. The survey found that over a third of European millennials (38%) are allocating to riskier investments, compared to just a quarter (24%) of ‘baby boomers’ (born between 1946 and 1964). This is despite over half (57%) of the millennials surveyed saying their investing needs have become more complex (compared to 35% of baby boomers) and 35% acknowledging they do not meet with their wealth advisor to review their goals frequently enough, which makes them less prepared (a figure that falls to 20% among baby boomers).

Appetite for holistic and differentiated advice grows

Amid prolonged economic uncertainty, demand for professional advice to interpret economic, market and political shocks is currently heightened for many investors. However, European demand lags the global average. The survey found that 38% of European millennials and 34% of boomers are actively seeking advice from their financial advisor in response to political instability or uncertainty, compared to 42% and 33% respectively at a global level. The survey also found that more than half (51%) of European millennials regularly seek additional independent financial advice in response to portfolio volatility, compared to 58% within this age group globally.

In terms of the preferred channels to receive advice, 47% of all European investors look to speak to advisors virtually, 30% opt for face-to-face interaction, and 23% look to the social media or apps. This has changed since the previous EY Global Wealth Research Report in 2021, which found that 14% of European private wealth clients preferred virtual advice, 33% preferred face-to-face interaction, and 18% looked to the social media or apps.

Millennial investors are making the switch

The report also found that the appetite to switch or move money from one provider to another is highest within the younger investor age brackets. Millennials in European markets were found to be more than twice as likely to switch, add a new provider, or move money (71%) than baby boomers (32%). This is similar globally, where 73% of millennial investors plan to switch, add a new provider, or move money from their current wealth management provider over the next three years, compared to 29% of baby boomers. Investment in newer asset classes – such as FinTech, digital and crypto – is on the rise, and European private wealth clients are looking to the FinTech and alternatives market. The demand for professional advice for these asset classes is also higher than in traditional areas, and investor engagement with FinTechs is expected to rise 12% in the next three years. “The current banking volatility has accelerated the desire for greater diversification particularly among the wealthier Millennials”, adds Urs Palmieri, Wealth & Asset Management Consulting Leader at EY Switzerland. This client group is also more receptive for investments into alternative or new asset classes such as private market investments and digital assets. This is partially explained by the fact that the Millennials believe they are more knowledgeable about financial literacy than other generations.

Swiss investors react to volatile markets

Investors in Switzerland are reacting to the volatile markets in different ways. A majority have rebalanced their financial investments. In Switzerland, too, it is primarily the "Millennials" who are increasingly focusing on active, higher-risk investments (36%), and "Generation X" is also not averse to increasing active investments (29%). In contrast, many Baby Boomers and especially Generation X investors focus on traditional saving. This type of investment is not preferred by Millennials: only 7% would like to invest more of their assets in this way. A full 57% even say they want to reduce their own savings.

As in Europe, investors in Switzerland are increasingly seeking professional advice from their existing providers, but also from new ones. Wealth managers thus have a valuable opportunity to use an innovative approach to help clients navigate volatile and complex markets. "For maximum impact, wealth managers should continue to expand their hybrid models, using them to create an offering of face-to-face and virtual advice, as well as self-service options for their clients." 

Wealth Management Becoming More Complex

Almost half (47%) of investors in Switzerland believe that meeting their investment needs has become more complex over the past two years. The three generations under consideration are close together in this respect: both the representatives of the "Baby Boomers" and the Millennials, each with 50%, believe that complexity has increased with regard to investment needs. The figure for Generation X is 45%.

38% of all investors surveyed believe that managing their assets has become more complex, and 32% think that planning for retirement has become more demanding. According to 75% of respondents, investment advice in particular has become more complicated.

Despite increased complexity and volatility, 68% of respondents believe that they are well prepared to achieve their investment goals, or that they have achieved them. Swiss investors are thus slightly above the self-assessment at global (63%) or European (62%) level.

Defensive investment objectives and acceptance of digital services

In terms of investment goals, defensive goals such as safeguarding wealth (35%), ensuring a reasonable return (30%) and saving to achieve financial goals (29%) dominate in 2023. Offensive goals such as increasing investment returns (26%), reducing taxes (24%) or passing on wealth to the next generation (22%) play a minor role in 2023. As recently as 2019, offensive investment goals such as tax reduction (47%) and passing on wealth to the next generation (41%) still dominated.

Investors are showing a marked increase in acceptance for virtual services in the wealth management area, which are thus more or less on a par with personal direct advice on site. Above all, for the start of a business relationship with an account opening, the purely digital route is preferred by almost half: 45% of investors believe that this first step can be taken via a digital platform (website or app).  

For services such as financial planning and account management, face-to-face advice in private still dominates (44% and 42% respectively). However, the use of virtual channels such as video chat or e-mails is steadily gaining acceptance: in the case of financial planning (38%), investment management (45%) and account management (40%), a large proportion of respondents believe that they no longer need on-site contact for such services.

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