Financial advisers may need to become more like financial therapists in the future by helping clients deal with their spending habits and in reaching their life goals rather than providing asset allocation advice, according to new research released by Ernst & Young (EY).
The EY 2016 Global Wealth Management Report has pointed to a situation in which clients are more than ready to switch wealth management providers and to embrace technology solutions such as robo-advice to reach their objectives, with Australian clients being little different to their overseas counterparts.
Commenting on the research findings, EY Oceania Wealth and Asset Management Leader, Antoinette Elias, said she believed the results should make the local industry sit up and take notice.
"For Australian clients, better pricing and better portfolio returns were the key drivers of change, but the research also found a need for greater transparency around fees and a stronger focus on goals-based planning," Elias said.
"Australian clients also indicated an increasing willingness to embrace new technology, with one in four (25 per cent) open to investing via automated advice services, such as robo-advisers. In this environment, wealth managers will need to differentiate themselves around customer experience if they want to capture market share." she said.
Where clients' expectations of their wealth managers was concerned, the EY report pointed to three areas where firms appeared to be out of step with client expectations:
- Transparency — Clients are eager for a new level of transparency that includes rating their advisers and connecting with similar clients in public forums.
- Advice channels — Clients are significantly more open than firms to adopting digital channels for wealth advice, not just service.
- Role of the adviser — The financial adviser may become more like a financial therapist in the future, helping clients with spending habits or reaching life goals instead of strictly providing standard asset allocation advice or other activities that could be automated.
Elias said the rules of the game had changed substantially and that wealth management firms had to recognise that client experience was the linchpin that could make or break a firm in the new landscape.