EY has cast its eye in an annual report on what clients think of wealth management – such as a desire to switch, move money, their approach to fees, AI, and alternative investments.

More than a quarter (29 per cent) of wealth management clients worldwide plan to switch their primary provider; the figure is higher among Millennials and in high-growth regions, a survey by EY has found. Clients also expect to move an increasing slice of investments: 45 per cent plan to shift between a quarter to half of their assets.

The findings come from the EY Global Wealth Research Report, which surveyed nearly 3,600 wealth management clients globally. (See a separate story about Asia-Pacific clients’ views.)

In other findings, the EY report said that many affluent and HNW individuals are unprepared for inheritance and wealth transfer, struggle to trust AI, and look more to alternative investment options.

“As European markets continue to face economic challenges and geopolitical uncertainty, wealth managers are flexing to tailor their advice and offerings and respond to changes in client demands,” Roopalee Dave, UK wealth management leader at EY, said. “Challenging times require more frequent communication, assurances that risks are being managed, and advice that keeps pace with external impacts. All this while still managing broader change to benefit investors, from tech transformation and digitalisation to increased sustainability and risk management.”

Among the main conclusions of the report, it said “clients report strong satisfaction with all key dimensions of wealth management.” 

“However, specific client clusters are less satisfied, and the relevance of investment performance in driving satisfaction means that there is no room for complacency,” it said. Growing complexity is an issue: Globally, 45 per cent of clients see investing as having become more complex. Clients are deeply worried about volatility, inflation, political uncertainty and other macro factors. One in five say their advisors are not addressing their concerns, and one in three feel underprepared to meet their financial goals.

Among top concerns in managing investments and financial wealth, globally, economic stability takes the most prominent spot, with 55 per cent overall giving this factor. In Asia-Pacific, 60 per cent said this was their major concern, and 59 per cent of those in the Middle East did so. For North American respondents, the reading was 54 per cent; for Latin America, 56 per cent, and Europe appeared to be least worried on this point, at 51 per cent.

In other “worries,” 52 per cent of all respondents on average cited inflation; 45 per cent said “market volatility”; 43 per cent mentioned “geopolitical risks”; 41 per cent said “regulation and policy changes”; and 39 per cent referred to “interest rates.”

AI has been a dominant theme in wealth management this year, and the EY report is no exception. The report finds that while AI is broadly recognised by European investors of all ages as being valuable within the sector, and 56 per cent expect it to be part of the advice process, only 37 per cent (32 per cent for UK investors) say they trust AI as much as human advisors. Investors in all age groups are clear that even if AI has played a role, they expect human oversight in all research and recommendations.

Most wealthy clients worldwide (60 per cent) actively expect wealth managers to incorporate AI into their core activities. Only one-fifth of clients have no expectation for wealth managers to use AI.

“It’s clear from these findings that there is a real belief among clients – including the richest investors accustomed to receiving highly bespoke, personalised service – that AI will substantially improve the value of wealth management advice and services,” the report said. “It could be argued that these views are a function of excessive hype about the capabilities of AI. Be that as it may, there is a strong likelihood that AI applications will continue to advance rapidly right across the global economy. As client experiences of AI in the 'real world' accelerate, wealth managers who fail to embrace AI risk creating a dangerous gap between what clients expect and what they can deliver.”

The report said that 71 per cent of clients either believe or suspect that their wealth management providers are already using AI to manage their wealth (37 per cent are aware that AI is being used, 31 per cent think it may be, 18 per cent are unsure and 11 per cent say that AI is not in use).

Trust
The trust implications of AI are explored in the study. 

The proportion of clients with a high level of trust in AI is greater in fast-growing regions (Latin America 16 per cent, Asia-Pacific 15 per cent and the Middle East 13 per cent) than in more mature markets (North America 6 per cent and Europe 9 per cent).

Privacy in Europe
The report said data privacy is the biggest concern when it comes to AI, with 43 per cent of European investors (38 per cent of UK investors) expressing less trust in AI tools compared with human advisors. Globally, 51 per cent of respondents said data privacy worries them.

"AI in wealth management is complex and requires a huge degree of trust. Although many investors acknowledge the benefits of automation and anticipate its growing presence, a considerable degree of scepticism persists, which needs to be overcome if the sector is to integrate increasing AI to processes,” EY’s Dave said. 

In other areas, the report said there is a shift in what clients want in the kinds of fees they pay, amid concerns about hidden costs. 

Some 25 per cent of European Millennials, for example, are concerned about hidden fees, putting a spotlight on the need for pricing to be transparent.

Alternatives
Investment in newer, alternative asset classes – such as fintech, digital and crypto – is on the rise according to the survey data, especially amongst 30 to 45-year-olds. Some 48 per cent of European Millennials say they have investments in digital and crypto assets, compared with 32 per cent of Gen X and 13 per cent of Baby Boomers.

The higher risks associated with alternative investments remain a hurdle: 45 per cent of European investors said it was the main barrier, followed by 38 per cent citing higher fees as their reason for caution.