When volatility causes complexity, how can wealth managers create opportunity?

As the industry experiences a period of exceptional change, our survey reveals unique client insights and explores crucial industry responses.

In brief

• Our research reveals an industry in flux – clients face heightened complexity and are increasingly willing to work with new providers.
• Empowering clients to navigate complexity holds the key to differentiation and value creation.
• Wealth managers face increasing challenges – but also have many opportunities to strengthen client satisfaction and trust.

Today’s investors are voting with their feet, willing to change advisors and add new relationships, while searching out the products, services and advice they need to make sense of an increasingly complex investing world. That insight is one of the more surprising findings to come from the 2023 EY Global Wealth Research Report.

Conducted during a period of exceptional volatility, the results show that far from consolidating assets, clients are increasingly willing to spread their portfolios across several providers. Investors are attempting to safeguard their wealth by transferring their assets to a provider capable of delivering better investment performance and diversifying their portfolio. As these investors seek better investment options, advisors are facing the challenge of meeting complex client demands while keeping up with the fast-paced financial innovation and accelerating technological transformation to stay ahead of the competition.

Investors’ fundamental goals, meanwhile, remain defensive: They’re less focused on creating purposeful legacies than they were during the pandemic. Yet clients reveal a growing appetite for advice and support, especially when it comes to new, complex investment products.

Report scope and results

The findings of the research are summarized in the full report. These draw on proprietary data obtained from a primary survey1 of more than 2,600 wealth management clients based in 27 key markets around the world. The report explores the implications of the often remarkably varied reactions of clients in different regions, of different ages, of differing levels of wealth – and even of different behavioral traits – to the complex and increasing volatile market environment.

For instance, Millennial clients stand out for their heightened uncertainty over their financial health. As a result, the same group also demonstrates an above-average appetite for advice and education, coupled with a greater willingness to try new products. Furthermore, younger investors are more likely to shift their investment approach at short notice – often switching to new wealth management providers altogether.

But the report doesn’t only examine shifting investor views. It also takes a close look at the actions wealth managers can take to transform their own activities in response. These range from initiatives, like harnessing artificial intelligence (AI) to maximize the value of multi-channel client interactions, to more fundamental changes such as pivoting from a “one-stop shop” strategy to an ecosystem approach based on performing a specialized, differentiated role in collaboration with others.

2. Empowering clients

In “empowering clients,” we look at the need for a step-change in personalization, and examine how wealth managers can enhance their hybrid engagement models: harnessing innovative digital collaboration tools and offering a seamless, omni-channel combination of self-service interactions, virtual engagement and traditional in-person advice.

Client appetite for virtual advisor interactions has been transformed since the pandemic. In our 2021 survey, just 12% of clients identified virtual consultations as their preferred advice channel; this figure now stands at over 40%, becoming the most preferred channel for planning and advice activities.

3. Delivering value

In “delivering value,” we compare clients’ levels of satisfaction with new asset classes such as private markets and digital assets with those of traditional investment products such as actively managed funds. We also look at the improvements that wealth managers can make in product deployment, education, tax and succession planning – along with clarity over charges – in order to develop more compelling value propositions.

While 85% of clients are satisfied with their level of access to products, satisfaction with performance of different product categories varies significantly. There is an opportunity for providers to improve satisfaction for innovative investment asset classes, foreign exchange and financial education.

The research suggests that the exceptional circumstances of recent quarters may be creating more competitive opportunities for wealth managers than at any point in recent years. At the same time, providers face a growing, interlinked set of challenges – including a challenging combination of eroding wallet share and increasing client expectations.

Seizing the opportunities provided by this moment of flux will depend on wealth managers’ ability to differentiate themselves – building satisfaction and value by empowering clients to achieve their goals despite the increasing complexity they face.