A wealth manager can quickly lose a ton of business unless he does two seemingly contradictory things. Build closer personal relationships between clients and their heirs and leverage technology to allow clients to have greater control and vision.
To begin with, the latest EY Global Wealth Research Report has some good news for wealth managers. Surveyed in December 2024, almost half of the 3,600 end clients based in the Asia-Pacific region, expressed generally high satisfaction with their providers.
However, businesses cannot sit comfortably. And our research shows that Asia-Pacific clients are much more likely to switch asset providers than their global peers.
Approximately 36% of Asia-Pacific respondents may change their major asset providers within the next three years. This is comparable to the global average of just 29%.
This trend is even more pronounced in certain major markets. In China, especially, 51% of respondents have expressed openness to switching, compared to only 18% in Australia, 39% in Singapore and 35% in Hong Kong.
The transfer of generations of wealth in the coming trillions could potentially launch a starting gun with this move. 86% of heirs say they plan to maintain the grantor wealth manager, but it doesn’t follow that those companies will retain a large portion of the new wealth owner business.
Even though they hold their major providers, clients in the Asia Pacific spread wealth among more managers than in other regions. The global average is that clients hold 2.3 providers, with a prominent concentration in North America, with clients using 1.7 providers on average, and Europe (2.1) also.
Spreading wealth
In the Asia-Pacific region, the average wealth client is already expanding business across 2.9 providers, with 43% expecting to increase that number over the next three years. More than half of millennial clients, who are already an average provider of 3.1, are planning to use more companies in the future.
74% of Asia-Pacific respondents expect to move a significant portion of their portfolio (26-100%) from current major providers.
74% of Asia-Pacific respondents expect to move a significant portion of their portfolio (26-100%) from current major providers. This is significantly more clients looking to change a higher percentage of wealth than found in the 2022 EY Global Wealth Report Survey.
Since then, only 58% of clients have been considering such substantial changes.
Return to the kitchen table
The wealth business is changing rapidly, with a lot of risk of losing and could potentially be acquired over the next three years. So, what should companies focus on?
While the transfer of generational wealth has been an important focus in the industry in recent years, clients in the Asia-Pacific region feel less prepared for this than people around the world. This is a particular concern for Gen X clients and those in the wealthy and wealthy segment.
Wealth managers need to build trust with clients’ real estate beneficiaries and demonstrate that they understand the financial needs and goals of the next generation.
This year’s extreme market volatility has already made clients seek more frequent meetings with wealth managers. Companies should not view these sacrifices as sources of margin pressure alone. They provide an opportunity to improve communication between clients and their heirs by returning to their kitchen tables as trustworthy advisors.
Companies need to closely understand the various priorities of beneficiaries and seize opportunities to remind them of their own brand strength, financial sustainability and investment performance.
These are always important considerations when choosing a wealth manager. But clients want other things, such as cutting-edge technology commands.
A significant 72% of respondents in the Asia-Pacific region already expect wealth managers to incorporate AI into their product offerings in some form.
The future is here
Nearly three-quarters of asset clients in the Asia-Pacific region are completely satisfied with the use of AI to report and monitor, while 71% say they will continue to use current advisors if they learn that it is a critical component of the investment advice provided by AI.
A majority (57%) of Asia-Pacific clients have even said they would consider using AI-run platforms for wealth planning without human advisors or relationship managers. This is comparable to just 44% of global wealth clients.
However, there are important differences in attitudes towards AI among clients of different age groups. Boomer is far more concerned about AI accuracy, compared to 49% of millennials and just 44% of Gen X clients, with 60% expressing their doubts. Approximately 44% of boomers have expressed concern about the lack of human contact with AI. Boomer is also somewhat uneasy about the increased dependence on technology.
Key questions from asset management companies include how to deal with voluntary clients in the future of AI, and whether clients need to respond quickly to the required AI.
Alternative expertise
Wealth managers must also recognize that clients in the Asia Pacific are increasingly looking for expertise in a wide range of alternative investments, including crypto and other digital assets. Approximately 43% of Asia-Pacific respondents have already invested in these, well above the average of 32%.
Over a third of Asia-Pacific clients who have not yet invested in are considering allocations to multi-strategic hedge funds, global macro hedge funds, venture capital, secondary and art and collectibles.
If large companies don’t fill these product gaps, they could lose their business to experts and emerging wealth managers.
Elliot Shadforce, sector leader, Asia Pacific Wealth and Asset Management, ey
