Around 34% of high net worth investors in Asia-Pacific plan to switch wealth providers in the next three years, according to a survey conducted by EY. The latest findings compare to just around 15% of clients changing providers in the past three years.
The change is driven by emerging digital solutions, new digital habits and changing definitions of what clients value, with clients in Australia, mainland China and Japan among the most likely to switch providers, the report said.
The report noted that most clients in the region have no sole provider for their wealth management needs, adding that they maintain at least five different providers.
“There is the potential for a significant movement of clients across the region as they look for providers who can better meet their evolving needs,” Elliott Shadforth, Asia-Pacific wealth and asset management leader at EY, said in a statement.
“With a multitude of options for wealth management providers available to clients, especially with the intensified competition among incumbents and new entrants, firms will need to continuously raise the bar for satisfying client demands,” he said.
Rise of digital communications
More than half (55%) of respondents in Asia-Pacific indicated that they prefer mobile apps as their primary engagement channel for wealth management, compared with just 14% in 2016. The current percentage in the region is also higher than the global average of just 41%, according to the report.
With the rise of digital communications, in-person and phone interactions have declined as the primary communications channel among wealth management clients, down to 19% from 40% in 2016.
However, EY believes that there will still be a role for human advice delivery.
“Wealth managers will need to focus on areas where they can add most value, reconfiguring their digital delivery model to meet new expectations from clients,” it said.
In terms of digital features, 59% of Asia-Pacific clients say that a 24/7, any-device and anywhere digital access is the most important element when interacting on digital channels with their wealth management firm. This is highest in Singapore at 68%.
In China, 63% of clients place greatest value on tech simplicity and intuitive wealth processes when interacting through digital channels.
When it comes to emerging technology, only 2% of Asia-Pacific respondents prefer digital and voice-enabled assistants as a primary channel today. However, 16% say they would prefer this channel in the near future. This future demand for digital assistants is greatest for receiving financial advice (33%).
However, the adoption of digital assistants across the sector will likely be influenced by the regulatory environment in each Asia-Pacific market, the report said.
“As wealth managers prioritise their digital investments across multiple channels, they need to consider how client engagement may evolve in the coming years,” Mark Wightman, Asia-Pacific wealth and asset management advisory leader at EY, said in the statement.
“This may mean reallocating budgets from websites to mobile apps and voice-enabled services sooner than planned, and capitalising on hybrid models where clients have access to both digital tools and human interaction.
“While much of this technology might not be readily available in the market today, it provides a clear indication of what clients are looking for when engaging with their wealth manager.”
More transparency needed
Separately, the report noted that although two-thirds of clients in the region have full awareness of understanding of wealth management fees, one out of 10 clients say they do not understand fees at all.
“The answer is not simply lowering fees, but rather a combination of increasing transparency and predictability when it comes to pricing models and equipping advisors with ways to communicate value beyond investment returns,” Shadforth said.