WMA JOURNAL Working for the Investment Community & their Clients
CLIENT RESEARCH
CLIENT RESEARCH
Wealth management in the eyes of the investor: the results ComPeer asked 1,000 clients key questions about the service they receive
2013 was a year of major regulatory change for the wealth management, retail fund management and the advisory sectors. The investment landscape is proving more positive although still somewhat fragile, but how are the clients responding to these challenges?
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omPeer undertook a major research exercise with 1,000 investors, split between high net worth (£1m+ of investable assets), affluent (£250k - £1m) and mass affluent (£50k - £250k), in conjunction with our research partner, EY, last October. The results were presented at our November 26th conference. We started by asking what would persuade clients to invest more of the cash they currently hold on deposit and the two strongest replies were ‘a guaranteed return on capital’ and ‘a guarantee that my capital is protected.’ (58% and 57% of the sample respectively) On a related theme 63% of the mass affluent and 77% of high net worth respondents agreed with the necessity to take risks to obtain a good return, however these figures dropped 15-20% when asked if they would be happy to risk losses to achieve greater long-term gains. When asked to prioritise five reasons to choose a wealth manager; brand/reputation, range of products, investment performance, level of fees and relationship with the firm, investment performance was easily ranked top, ahead of brand/reputation. When segmenting by wealth band, investment performance was deemed most important by the mass affluent (45%), with the figure falling to 37% for the high net worth. The same options were put forward for reasons to stay with a wealth manager and here investment performance was even more dominant, across all wealth bands. When the investors’ awareness of RDR was tested only a quarter had heard of it and, somewhat disappointingly, this percentage hardly changed when looking at only advisory clients. Amongst the minority who had heard of RDR nearly a third were completely unaware of its objectives. If this suggests communication should be improved, the point was amplified when we asked how many times investors had met their wealth manager in the first ten months of last year. Less than half had
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and there was a significant gap between the frequency clients wanted to meet their wealth manager and the reality. There has been much discussion of an advice gap being an unintended consequence of RDR and we asked how likely respondents were to invest without advice. Of those who are currently receiving advisory or discretionary services, 39% are likely or very likely to invest without advice. Given they represent some £500bn of assets it is easy to see the execution only sector growing rapidly from its current level of £110bn of assets under administration, particularly as the high net worth segment was the most enthusiastic. When investors were asked who would pick up the bill for the new regulations two thirds expected it to be themselves, with increased fees being the most likely method used. A surprisingly high 90% of investors were happy with the reports they received, although 25% admitted there were significant parts of the reports they didn’t understand. This apparent contradiction was due to many of those clients blaming themselves for their lack of understanding. Key areas for improvement
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A surprisingly high 90% of investors were happy with the reports they received were the client portal, client communication/ education and more formal surveys of client opinions. 40% of those seeking significant improvement were likely to change wealth managers if issues were ignored. Investors were asked if they thought their wealth manager and the industry as a whole was client-centric. Only 54% thought their wealth manager was and the results were worse for the industry. This key challenge reminds us of one CEO of a wealth management firm who, when asked how relationships with their clients had changed replied “we used to say we were client-centric, but now we really mean it!” We will see how many of his counterparts ‘mean it’. Mike Levy ComPeer Ltd WMA JOURNAL 21
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