how do you build value when clients want more than wealth ... · value when clients want more than...

How do you build value when clients want more than wealth?2019 Global Wealth Management Research: Switzerland key findings

2019 Global Wealth Management Research: Key findings for Switzerland

Bruno Patusi, Partner

EY Wealth & Asset Management Leader Switzerland

An increasing number of clients are willing to pay for financial advice, but what they value is evolving rapidly. To better help wealth management providers build solutions that meet these changing expectations, EY surveyed 2,000 wealth management clients across 26 countries to understand what matters most to them.

For further insights, please visit ey.com/wealth2019.

Urs Palmieri, Associate Partner

EY Wealth & Asset Management Advisory

Contacts

1. The rise of client switching

2. Delivering high-value solutions

3. Digital and voice-enabled technology

4. Rethinking pricing models

5. Methodology

EY 2019 Global Wealth Management Research

The rise of client switching

One-third of clients plan to switch wealth management providers over the next three years. What can your firm do about it?

• Plans to switch increase with wealth but decrease with age and level of investment knowledge.

• Clients switch for value, but their definition of value is complex and multidimensional.

• Independent advisors and universal banks are expected to see the greatest growth. Swiss clients are not yet ready to entrust their assets to FinTechs.

The rise of client switching


32%

43%

35%

32%

39%

51%

Global clients

Europe clients

Switzerland clients

% of respondents

Moved assets in the last three years Plan to move assets in the next three years

Who is switching


Half (51%) of Swiss clients are looking to move money from wealth management firms in the next three years, a higher propensity than European counterparts.

Significant opportunity to attract new assets in the

Swiss client base

Key Life EventsGlobalclients

Europeclients

Swissclients

1. Changing job or starting a new/own business 61% 65% 50%

2. Inheriting/receiving money 49% 57% 67%

3. Getting married 48% 52% *

4. Separation or divorcing 43% 58% 60%

5. Sending children to college 39% 53% *

6. Buying a house 39% 51% *

7. Retiring 38% 50% 62%

Why clients are switching

This movement of money happens most often during major life events, typically when clients start a new business, inherit money or plan for retirement.


% of respondents going through a life event, that have also moved

assets in the last three years

* There are low sample sizes for Switzerland clients that indicated they had been through the following specific life stages or they consider these events not to be significant enough; sending children to college (6) getting married (7) and buying a house (8)

Why clients are switching

A firm’s qualifications and creditworthiness are key differentiators for Swiss clients, they are important enough for 27% to switch for when evaluating a relationship.


27% of Switzerland clients place very high importance

on competency and creditworthiness

Corporate and social responsibility is becoming

more important whenselecting a firm

16%

20%

12%

10%

4%

8%

20%

16%

16%

16%

29%

27%

20%

22%

22%

22%

22%

25%

18%

16%

27%

31%

29%

25%

27%

27%

24%

22%

16%

14%

0% 50% 100%

Wealth management qualifications

Creditworthiness

Corporate social responsibility

Transaction processing, reporting

Brand reputation

Superior investment performance

% of respondents

Critical factors when evaluating quality and reputation

No bearing Low Moderate High Very high (would switch for)

Where clients are going

Clients in Switzerland will typically use over 4 different types of wealth providers, this increases for clients with higher levels of financial knowledge.


4.8

4.44.5

4.8

4.34.5

2.0

4.0

6.0

Global clients Europe clients Switzerland clients

Ave

rag

e n

um

be

r o

f d

iffe

ren

t w

ea

lth

pro

vid

ers

Current number of different wealth providers used

Future expected number of wealth providers used

5.3Future

relationships

4.0Future

relationships

High Knowledge levels Low Knowledge levels

Switzerland clients with…

11%

22%

12%

-2%

-6%

8%

-13%

-12%

42%

39%

16%

28%

-5%

2%

-9%

-2%

Where clients are going

External asset managers are those firms likely to gain from this movementbesides the universal and private banks. Penetration of Neo-banks and FinTechsin Switzerland is much lower compared to Europe and the rest of the world.


Increase or decrease in average

% of respondents, i.e. net change of expected usage of type of provider in the next 3 years

* “FinTech” refers to new technologically-enabled services that enable investors to handle investment activities without the need for human interaction; Note: some categories (not relevant for Switzerland) were left out

Global clients Switzerland clientsEurope clients

19%

18%

6%

4%

-4%

-5%

-6%

-11%

FinTech* and Neo-Banks

Independent advisor / EAM

Full-service / Universal bank (e.g. UBS, CS)

Family office

Independent Asset/Fund manager

Private bank

Online banks

Retail banks

Delivering

high-value solutions

The future of wealth management will focus on outcome-based solutions that provide easier, faster and more personalized ways of matching products and services with real-time client demands.

• Many clients want advice and planning but are holding back.

• Though clients are increasingly thinking less in terms of products, specific segments continue to see high value and should not be ignored.

• Leading providers must balance offering individual products and services with simple, clear solutions that meet client needs.

Delivering high-value solutions

26 May 2019 EY 2019 Global Wealth Management Research

The majority of Swiss clients express interest in financial advice and planning, yet half remain on the sidelines.

Capturing clients on the sidelines

There are a large number of clients that are considering to use holistic financial advice and planning services –

yet many clients are unwilling to share all

data to enable a consolidated view across

all providers

27%

29%

29%

29%

35%

33%

37%

67%

65%

61%

61%

57%

55%

51%

0% 30% 60% 90%

Tax planning

Holistic advice, coaching on life goals

Advice on non-investment financial services

Asset allocation and portfolio management

Personal financial budgeting and planning

Insights into market trends

Financial education and training

Use now Considering / planning to use

% of respondents

Actively managed funds

AnnuitiesSRIs

Derivatives e.g. futures

Individual bonds

Individual stocks

IPOs/rights issues

Passive based funds

Private placements / VC

Tax-exempt investments

Advanced risk tools advice ESG advice

Specialized investing advice

Asset allocation by advisor

Market trends insightsFunds selection by advisor

Trade execution

Non-investment services Estate planning

Philanthropy

Healthcare, retirement planning

Holistic goals advice

Personal financial planning

Business financial planning

Tax planning

AM division accessCB division access

IBD access

Concierge services

Consolidated reporting

Daily financial management

Family office set-up

Financial education

Real estate investingNext gen. services

10%

40%

70%

10% 40% 70%

Providing solutions while meeting product desires

Wealth managers can convert and capitalize on the products that have high consideration levels.


Pro

du

ct C

on

sid

era

tio

n

Product Usage

High usage

Switzerland clients

High consideration

Note: This chart does not include ‘alternative investments’Note2: IBD – Investment banking division; CBD – Corporate banking; AM – Asset management; SRI – socially responsible investing


In the product and service proposition Swiss clients are prepared to switch for key differentiators, such as the exclusive access to products.


12%

12%

8%

12%

12%

8%

14%

16%

2%

20%

24%

25%

18%

24%

18%

18%

18%

25%

27%

24%

22%

29%

18%

24%

25%

27%

31%

18%

20%

24%

22%

29%

33%

27%

24%

27%

24%

22%

22%

20%

18%

18%

16%

16%

14%

0% 50% 100%

Access to exclusive products

Specialized products (alternatives)

Access to lending (mortgages)

Access to insurance-dedicated funds

Broad range of investment products

Global reach and offering

Access to low-cost management

Access to non-wealth services (banking)

Access to active management products

% of respondents

Critical factors when evaluating the proposition


24% of clients value access to exclusive

products - being the most important factor for

clients, enough to switch

Specialised products are also an important

differentiator for one in five clients

51% of Switzerland clients value the global reach and offering a firm can provide


Clients in Switzerland place the highest overall value on receiving strategic investment advice as part of the wider advisory capabilities.


51% of Switzerland clients highly value strategic

investment advice when evaluating wealth firms

24% of clients place critical value on a firm’s ability to provide life coaching and

holistic goal planning10%

10%

14%

6%

16%

4%

31%

31%

14%

16%

18%

25%

18%

16%

22%

31%

25%

41%

18%

24%

33%

33%

27%

18%

24%

20%

18%

14%

14%

12%

0% 50% 100%

Life coaching, holistic goal planning

Access to product research and analysis

Provide strategic investment advice

Specialized expertise (financial, health,retirement)

Market trends insights

Knowledge of tools for min. risks andmax. returns

% of respondents

Critical factors when evaluating advisory capabilities


Achieving clear outcomes for clients

The consideration of using planning services rises with certain life events. Following a separation, retirement or having a child Swiss clients consider using financial planning.


% of respondents considering usage

The following service types received higher interest from Swiss clients compared with their Global and European counterparts:

1. Next generation services e.g. wealth transfer

2. Tax planning

3. Estate planning

4. Healthcare, aging and retirement planning

5. Financial education and training

6. Holistic advice, coaching on life goals

Most relevant opportunities to link planning services for Swiss based clients

44%

44%

40%

37%

31%

31%

30%

28%

17%

0% 25% 50%

Having a child

Separation or divorcing

Retiring

Inheriting/receiving money

Buying a house

Sending children to college

Starting a new business

Getting married

Leaving a job

Digital and voice-enabled technology

Client preferences are rapidly changing toward digital and voice-enabled assistants not just for basic, transactional activities, but to manage wealth and receive financial advice.

• As clients embrace new digital channels, first-generation digital channels are getting pushed to the side.

• Digital and voice-enabled assistants represent the next digital wave clients prefer them more for financial advice than transactions.

• Despite their propensity for all things digital, many clients do not want to lose the human touch.

Digital and voice-enabled technology


Keeping pace with digital change

Robust cybersecurity and data privacy are still a critical features for Swiss clients when they evaluate relationships at wealth management firms.


18%

12%

8%

10%

2%

16%

8%

6%

14%

14%

29%

16%

14%

27%

20%

31%

27%

29%

24%

29%

33%

20%

20%

20%

16%

22%

20%

25%

33%

24%

39%

29%

25%

24%

20%

20%

18%

14%

14%

14%

0% 50% 100%

Access to FinTech solutions

Simple, frictionless digital experience

Simple, intuitive processes (paperless)

Remote access to advisor

24x7, any device, anywhere digital access

Access to online portfolio reports

Robust cybersecurity and data privacy

Access to self-service capabilities

% of respondents

Critical factors when evaluating client technology

No bearing Low Moderate High Very high (would switch for)51% of clients place critical

value on digital access, anytime anywhere

53% of clients highly value a firm’s robust cybersecurity

and data privacy

Note: “FinTech” refers to new technologically-enabled services that enable investors to handle investment activities without the need for human interaction

2016 survey findings 2019 survey findings

2016 actual

preference

2019 projected

preference

2019 actual

preference

2022 projected

preference

Mobile applications 10% 13% 53% 67%

Website access 35% 37% 18% 10%

Face-to-face 33% 25% 16% 12%

Phone calls 16% 19% 10% 6%

Email/text n/a n/a 2% 2%

Web conferencing n/a n/a 0% 1%

Social media 5% 6% 0% 0%

Digital assistant n/a n/a 0% 6%

Keeping pace with digital change


Increase or decrease in actual or preferred

usage (% of respondents)

Note: 2016 figures taken from EY’s Could your clients’ needs be your competitive advantage?

Client demand for technology in Switzerland is focussed on mobile led wealth activities.

Blending high-tech with “high-touch”

There is a fast growing preference to use mobile apps in Switzerland, not just across transactional elements, but also for receiving financial advice.


Executing transactions

Learning about products and services

Monitoring/analysing results

Getting an alert on portfolio deviations

Rebalancing portfolio/asset allocation

Receiving financial advice

% of respondents

69%

76%

53%

65%

57%

67%

53%

71%

41%

61%

47%

61%

12%

6%

18%

10%

20%

12%

20%

12%

33%

16%

8%

6%

10%

6%

6%

4%

16%

2%

2%

4%

10%

12%

18%

6%

10%

10%

18%

16%

8%

12%

25%

12%

14%

4%

22%

18%

6%

4%

2%

2%

4%

6%

2%

2%

6%

2%

8%

TodayIn future

TodayIn future

TodayIn future

TodayIn future

TodayIn future

TodayIn future

Mobile apps Website access Phone calls Face-to-face Email/text Digital assistant/chatbot

Leading the next digital wave

The Swiss clients anticipate faster adoption of mobile apps for receiving financial advice. Firms will need to reconfigure their digital delivery model to meet these expectations.


-14%

-3% -4%

+11% +10%+14%

-40%

0%

40%

Global clients Europe clients Switzerland clients

Ch

an

ge

in

% o

f re

spo

nd

en

ts

Be

twe

en

cu

rre

nt

an

d f

utu

re c

ho

ice

Face-to-face: financial advice

Mobile app: financial advice

16% - 12%

53% - 67%

18% - 15%

27% - 37%

67% of Switzerland clients will prefer adopting mobile apps as a primary channel to receive financial advice,

up from the current proportion of 53%

Face-to-face interactions remain selectively

important to Swiss clients but less so than for their European counterparts

Rethinking pricing models

Many clients do not trust they are charged fairly; firms must better demonstrate value with greater transparency and choice.

• Wealth managers are struggling to communicate value to clients.

• Clients struggle to understand how much they pay and are concerned about hidden costs.

• Clients are dissatisfied with how they pay and show a preference for simplified price structures.

Rethinking pricing models

A desire for clarity and simplicity

Compared to other regional results, Switzerland clients have poorer awareness levels of their advisory, trading and product fees. More can be done to improve transparency.


I am aware of advisory, trading and product fees (including inducements), and how much I am paying

I am not aware of all the advisory,trading and product fees that I am paying

I am aware that I am paying advisory, trading and product fees (including inducements), but I do not know the exact amounts

56%17%

27%

Global clients

41%

27%

31%

Switzerland clients

44%

22%

34%

Europe clients

A desire for clarity and simplicity

The research indicates that Swiss clients care a lot about the transparency of the fees but less so about the effective levels of fees they are paying.


10%

8%

8%

20%

18%

33%

27%

25%

18%

20%

31%

27%

24%

18%

14%

0% 50% 100%

Transparent pricing andperformance results

Fee payment method

Low competitive fees

% of respondents

Critical factors when evaluating pricing and transparency

No bearing Low Moderate High Very high (would switch for)24% of clients place critical value on the transparency

around pricing and performance results

Only 14% of the Swiss clients place very high importance on the level of fees they are

paying

Many clients do not think they are charged fairly

While Swiss clients are more likely to trust being charged fairly, a significant minority of Switzerland clients do not understand how their advisor is compensated.


I understand how my wealth manager or advisor is compensated

I trust my wealth manager or advisor to charge me fairly

Strongly disagree Disagree Neutral Agree Strongly agree

% of respondents

3%

5%

4%

13%

16%

22%

28%

25%

18%

32%

31%

25%

21%

19%

25%

0% 50% 100%

Global clients

Europe clients

Switzerland clients

3%

3%

4%

14%

19%

29%

28%

23%

16%

31%

28%

29%

21%

23%

18%

0% 50% 100%

Global clients

Europe clients

Switzerland clients

Demanding alternative pricing models

When it comes to the way Swiss clients currently pay, a significant proportion indicated a preference to change the method of payment.


39%would like to

keep the same payment method

61%would like to change their

payment method

Switzerland clients on average…

59%

57%

56%

54%

54%

52%

49%

47%

43%

39%

0% 50% 100%

General wealth management advice

Specialized financial advice

Specialized investment products

Discretionary wealth management

Standard investment products

Holistic financial planning services

Special access

Financial management and concierge services

Transaction services

Reports and analysis on my investment portfolio

% of respondents

Change the current payment method

Demanding alternative pricing models

There is no one specific preferred payment method, but Swiss clients welcome alternative methods to the currently prevailing AUM based fee model.


54%

6% 8%12%

5%9%

6%

36%

12% 10%

18%

4%7%

13%

0%

15%

30%

45%

60%

% o

f re

spo

nd

en

ts

Current pricing method Future pricing preference

Methodology

We asked 51 wealthy individuals what they value in their wealth relationships

51

3

29

19

6

5

13

27

7

21

23

9

42

Switzerland clients

MillennialsGeneration X

Boomers and beyond

Mass affluentHigh net worth

Very high net worthUltra-high net worth

High knowledgeAverage knowledge

Low knowledge

FemaleMale

1Source: 2018 Capgemini’s World Wealth Report2Africa refers to South Africa data only*Switzerland is a sub-selection of the Europe survey sample

Survey respondents

In 2018, we conducted a comprehensive survey of 2,000 clients in 26 countries to understand their changing investment needs, behaviours and value perceptions.

RegionSurvey sample (% of total)

Total HNW wealth(sum total)1

Total HNW wealth(% of total)

North America 32% US19.8 tr 28%

Latin America 11% US$8.7 tr 12%

Europe 25% US$15.9 tr 23%

Switzerland* 2% US$1.2tr 2%

Middle East and Africa2 4% US$4.2 tr 6%

Asia-Pacific 28% US$21.6 tr 31%

Total 100% US$70.2 tr 100%

HNW global wealth distribution

Age group categories

• Millennial: born 1981—1997 (age 21—37)

• Gen X: born 1965—1980 (age 38—53)

• Boomer: born 1946—1964 (age 54—72)

Levels of investable assets (in US$)

• Mass affluent: $250,000 to $999,999

• High net worth (HNW): $1m to $4.9m

• Very high net worth (VHNW): $5m to $29.9m

• Ultra-high net worth (UHNW): $30m to $100m


EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. For more information about our organization, please visit ey.com.

About EY Wealth & Asset ManagementIn our wealth and asset management work today, not everything is innovation; a lot of it is evolution. And it’s important to know the difference. FinTech disruptors continue to shift the rules, newer investors aren’t flocking to older channels and cost pressure is relentless. From data and AI, to tech platforms and partners, the questions have never been bigger, and the stakes have never been higher. We help clients re-think everything from pricing and operating models to coopetition and convergence.

We bring critical questions into focus, which lead to bolder strategies, simplified operations and sustainable growth. Our sharp understanding of the state of play allows us to shift discussion from reacting to change, to helping shape it. Ultimately, we work with clients not just to stay competitive, but to change investing for the better.

© 2019 EYGM Limited.All Rights Reserved.

EYG no. 002025-19Gbl1904-3117000ED None

BMC AgencyGA 1011311

ED None

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

ey.com

how do you build value when clients want more than wealth ... · value when clients want more than...

Documents