Wealth-management firms that fail to make strategic investments to deliver a superior client experience may risk losing a substantial portion of their business, according to the results of Ernst & Young LLP’s (EY) 2016 global wealth-management report

In fact, 40% of all clients surveyed for the report, entitled The experience factor: the new growth engine in wealth management, say they’re open to switching wealth managers under the right circumstances. This means that up to US$200 billion in revenue may be at stake for wealth-management firms.

“The dynamics of the wealth-management industry are changing rapidly,” says Gregory Smith, EY’s wealth-management advisory leader in Toronto, in a statement. “Retaining clients will become a high priority for firms, given the increasing awareness around robo-advisors and new advice models. Wealth managers need to engage their clients more than ever and invest in a creating better customer experience — increasingly using digital technology.”

Of all the factors that drive client retention and acquisition around the world, the EY report found that clients say their wealth managers are failing to live up to expectations in three key areas:

1. Transparency
Clients are increasingly questioning the transparency of portfolio performance and fees. Also, they’re eager for a new level of transparency that includes rating their advisors and connecting with similar clients in public forums.

2. Advice delivery channels
Clients are significantly more open than firms to adopting digital channels for wealth advice, not just service.

3. The advisor’s role
The advisor may have to 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.

“In Canada, with the advent of CRM2, our wealth managers face similar challenges as their global counterparts,” Smith adds. “They need to expand their services accordingly to offer more comprehensive, goal-oriented advice. On top of that, they must consider engaging with clients through digital platforms and even social channels.”

In addition, clients overwhelmingly identified the top driver of trust as transparency of portfolio performance and fees, the EY survey found. An advisor’s reputation, which was traditionally the main driver of trust, now comes in second. As wealth managers implement CRM2 requirements, the focus on transparency will only increase, the EY report suggests.

Thus, wealth-management firms and their advisors need to invest in technology to enhance the client experience and demonstrate the value they provide. Doing so will help compete with traditional competitors as well as new financial technology entrants, the report adds.

“We’ve seen an increase in regulatory requirements to offer more transparency to clients and we might well see more of this in the future, as the Canadian Securities Administrators are considering a proposal on advisor obligations to clients,” says Smith. “Wealth-management firms should really take a step beyond that, though. [They should] listen to what clients are asking for, and deliver better transparency, integrated digital channels and a seamless experience that many new entrants are offering. This industry will only get more competitive and the needs of clients should be front and centre.”


EY’s wealth-management practice surveyed more than 2,000 clients and 60 wealth-management senior executives globally to demystify client experience and uncover potential revenue opportunities for wealth managers.

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