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Wealth managers losing client trust

A report on the wealth management industry published by Deloitte, the business advisory firm, has highlighted a growing disconnect between high net worth individuals and the wealth management industry.

Tony Cohen, Head of Private Client Services at Deloitte, said: “The research shows that, on average, private clients’ make between 25% and 30% of their assets available to the wealth management industry. While a significant portion will be tied up in illiquid assets such as property, the figure demonstrates the growth potential for the industry.  It is clear from this research that the industry as a whole needs to regroup and consider the needs of its clients before it can tap into additional wealth.  While diversification, performance and efficiency are the common influencers on the choice of wealth manager by a high net worth individual, wealth managers need to go above and beyond this and consider the detailed needs of each client.  The needs of a financial professional, for example, can be quite different to those of a client with inherited, non-financial wealth.”

Key facts:
  • Ultra’ ($30m+) and ‘very’ ($15m-$30m) high net worth individuals are the least likely to grant discretionary mandates yet are worth over $5.5 trillion in Europe;
  • Meeting the needs of ultra and very high net worth individuals is crucial: the group comprises 72,000 in Europe but represents almost 50% of all financial assets owned by the whole high net worth group ($1m+);
  • Cost-to-income ratios in the wealth management sector have dropped from 75% to 71% in two years;
  • Cost-to-income ratios in the wealth management sector were, however, significantly higher than in universal banks (61% compared with 71%);
  • High end private clients are multi-banked clients, with on average, 4.7 wealth management relationships. 
Source: Deloitte