Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 165

Wealth managers need to focus on what clients really want

The wealth management industry is undergoing unprecedented change and, depending where you stand, this can feel like a big opportunity or a big threat. Shifting client demographics and preferences have changed the landscape, with fintech entrants starting to commoditise the traditional asset allocation advice model. This has eroded pricing power while simultaneously raising the bar for better and faster service.

Wealth managers face both significant opportunities to acquire new clients and assets, as well as daunting challenges in retaining clients in the face of competitive threats and digital disruption. What can Australian wealth managers do now to weather the storm and grow their businesses?

Invest in the client experience

For starters, they need to adopt more client-centric strategies and make better use of technology to capture a bigger share of the sector’s US$200 billion global revenue opportunity. Ernst & Young’s latest global wealth management report, The experience factor: the new growth engine in wealth management, found firms that don’t make strategic investments in client experiences risk losing a substantial portion of their business. In fact, 28% of all Australian clients said they were open to switching wealth managers under the right circumstances.

The majority (73%) of both Australian and global clients have relationships with multiple wealth managers, and while those Australians are less likely than the global average to consolidate their assets (38% compared to 57%), there are still over a third who would. This figure should make the local industry sit up and take notice.

The report found that Australian clients want greater fee transparency and more focus on goals-based planning. One in four was open to investing via automated advice services, such as robo-advisors. In this environment, wealth managers need to offer a superior customer experience to maintain and increase market share.

Regulatory compliance a huge burden for APAC managers

With client assets in play, 50% of global wealth managers said revenue growth is their major strategic business priority over the next two to three years, with specific initiatives focusing on enhancing client experiences. Within the Asia-Pacific (APAC) region, however, only 31% of wealth managers saw revenue growth as their top focus.

APAC wealth managers are instead bogged down by regulatory compliance. Regional managers expect to spend 42% on average of their strategic budgets on compliance, highlighting the sheer size of the regulatory burden in the region.

While passporting schemes can facilitate cross-border marketing of managed funds in participating economies, their immediate impact is to ramp up compliance costs. This, when combined with increasing competition, is having a big impact on margins regionally. Some 62% of APAC firms reported declining margins, citing competitive fee pressure and regulatory compliance costs as the key causes, compared with just 18% in North America.

Improving the client experience

The client experience in the wealth management sector is unique and complex, as it spans an individual’s life journey, often into the investment unknown. As a result, wealth managers have lacked a common definition or standard by which firms can measure themselves. Yet, the report identifies a common view of client experience – respondents value performance, engagement and trust the most in their wealth managers.

While clients and firms are aligned on most of these values, there were three key areas where firms appear to be out of step with their client’s expectations. They were:

  • Transparency — clients want far greater transparency that includes rating their advisors and connecting with similar clients in public forums
  • Advice channels — clients are significantly more open than firms are to adopting digital channels for wealth advice, not only 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.

How should wealth managers prioritise their client strategies? A firm’s reputation is no longer a barrier to entry. Newcomers can build trust with transparency and steal current and potential clients from existing players. Digital services are already here, and digital advice is inevitable for certain client segments. The wealth advisor’s value goes well beyond assigning clients to asset allocation models, but clients need to become believers too. Firms need to evaluate their strategies and align them with the key elements of what clients want – performance, engagement and trust.

The rules of the game have changed. To continue to grow, managers must learn to compete with man, machine, and hybrid-based firms to retain and attract assets.

In an industry where advances in technology, new types of competition and client expectations will be changing rapidly, firms that challenge traditional norms while remaining true to their core value proposition are in the best position to succeed. Delivering a comprehensive client experience is more essential than ever in this new wealth management landscape.

 

Antoinette Elias is Wealth and Asset Management Leader for Oceania at Ernst & Young.

The views expressed in this article are the views of the author, not Ernst & Young. The article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.

 


 

Leave a Comment:

RELATED ARTICLES

The most vital question ever put to me as a portfolio adviser

Commission's darkness shows need for clarity

What are wealth industry regulators thinking about?

banner

Most viewed in recent weeks

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Are franking credits worth pursuing?

Are franking credits factored into share prices? The data suggests they're probably not, and there are certain types of stocks that offer higher franking credits as well as the prospect for higher returns.

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Latest Updates

A nation of landlords and fund managers

Super and housing dwarf every other asset class in Australia, and they’ve both become too big to fail. Can they continue to grow at current rates, and if so, what are the implications for the economy, work and markets?

Economy

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

Retirement

Retiring debt-free may not be the best strategy

Retiring with debt may have advantages. Maintaining a mortgage on the family home can provide a line of credit in retirement for flexibility, extra income, and a DIY reverse mortgage strategy.

Shares

Why the ASX is losing Its best companies

The ASX is shrinking not by accident, but by design. A governance model that rewards detachment over ownership is driving capital into private hands and weakening public markets.

Investment strategies

3 reasons the party in big tech stocks may be over

The AI boom has sparked investor euphoria, but under the surface, US big tech is showing cracks - slowing growth, surging capex, and fading dominance signal it's time to question conventional tech optimism.

Investment strategies

Resilience is the new alpha

Trade is now a strategic weapon, reshaping the investment landscape. In this environment, resilient companies - those capable of absorbing shocks and defending margins - are best positioned to outperform.

Shares

The DNA of long-term compounding machines

The next generation of wealth creation is likely to emerge from founder influenced firms that combine scalable models with long-term alignment. Four signs can alert investors to these companies before the crowds.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.