Investors Are Leaner and Meaner: Survey
Investors are cautious and lack confidence in wealth managers and their ability to add value, according to the latest PricewaterhouseCooper Global Wealth Survey.
The study, conducted every two years based on the responses from CEOs and other senior executives from 275 institutions across 67 countries, found that the volatile economic climate in the aftermath of the financial crisis was translated into lower confidence from investors in their wealth managers amid a stricter regulatory environment and increased competition.
Of the respondents only 37 percent believed their clients were highly satisfied and would recommend them.
“What the CEOs are telling us is that their clients are not willing to recommend them to friends and colleagues and this is a recommended business so if they’re not doing that it does not bode well.
Clients are increasingly less loyal and less willing to take wealth management services for granted,” Steve Crosby, head of wealth management at PwC, told CNBC Tuesday.
Although regulation was deemed to add considerably to a firm's cost base it was also seen as beneficial, with 57 percent of CEOs saying that the new regulations are beneficial, while 50 percent said they were introducing a new technology to comply with the coming wave of regulation.
The greatest risks to an organization was reputational risk with 41 percent of relationship managers rated as average or below-average abilities to meet client risk-management and regulatory requirements.
Only 9 percent have both revenue and growth above 10 percent and a cost/income ratio of below 60 percent.The majority – 51 percent – have both lower growth and a higher cost/income ratio. Management firms must adapt to survive.
The survey also found that the stricter regulatory climate and increased legislation in this area would see Switzerland, London and New York being challenged as financial centers by the looser regulated centers of Hong Kong and Singapore.
“If you look at it regulation has become the hand in the purse of profitability and 50 percent are putting in new technology to comply. The changes that will come globally are actually the number one concern of wealth managers. The thing we’re seeing now is client service and a lot of what we do is how we serve clients. They want transparency, value for money and they want it to be crisp, they want to know exactly what they’re getting,” he added.