Asia-Pacific clients poised to switch wealth providers

Wealth managers may soon lose large volumes of business, unless they do two seemingly contradictory things: build closer personal relations with clients and their heirs, and leverage technology to empower clients to have greater control and visibility.

To begin with, there is some good news for wealth managers in the latest EY Global Wealth Research Report. The 3,600 end-clients surveyed in December 2024, almost half of them based in Asia-Pacific, expressed a generally high satisfaction with their providers.

But firms cannot sit comfortably. And our research shows Asia-Pacific clients are becoming much more likely than global peers to switch wealth providers.

Some 36 per cent of our Asia-Pacific respondents are likely to change their primary wealth provider within the next three years. That compares to a global average of just 29 per cent.

The trend is even more pronounced in certain key markets. Notably in China, 51 per cent of respondents express openness to switching, with 39 per cent of the same mind in Singapore and 35 per cent in Hong Kong, compared to just 18 per cent in Australia.

The coming multi-trillion dollar generational wealth transfer may fire the starting gun on this move. While 86 per cent of heirs say they plan to retain their grantor’s wealth manager, it does not follow that those firms will retain a majority of the new wealth owner’s business.

Even if they retain that primary provider, Asia-Pacific clients are spreading their wealth between more managers than in other regions. The global average is for clients to retain 2.3 providers, with a notable concentration in North America, where clients use 1.7 providers on average, and also in Europe (2.1).

Spreading the riches

In Asia-Pacific, the average wealth client already spreads their business between 2.9 providers, and 43 per cent of clients expect to increase that number over the next three years. More than half of millennial clients, who already average 3.1 providers, intend to use more firms in future.

Fully 74 per cent of Asia-Pacific respondents expect to move a substantial portion — anywhere between 26 and 100 per cent — of their portfolio away from their current primary provider. That is a notably larger percentage of clients looking to shift a higher proportion of their wealth than found in the EY global wealth report survey in 2022.

Then, just 58 per cent of clients were considering such substantial shifts.

Back to the kitchen table

The wealth business is shifting fast, with much at risk of being lost and potentially available to be won in the next three years. So what should firms concentrate on?

Even though generational wealth transfer has been a key focus of the industry in recent years, clients in Asia-Pacific feel less well prepared for this than those in the rest of the world. It is a particular concern for Gen X clients and for those in the mass affluent and high net worth segments.

Wealth managers must build trust with the beneficiaries of their clients’ estates and prove they understand the next generation’s financial needs and goals.

This year’s extreme market volatility has already made clients ask for more frequent meetings with wealth managers. Firms should not look at the cost of these only as a source of margin pressure. They provide an opportunity to improve communication with clients and their heirs by returning to the kitchen table as a trusted adviser. 

Firms should seize the chance to gain a closer understanding of beneficiaries’ different priorities and to remind them of their own brand strength, financial sustainability and investment performance.

These are always key considerations in choosing a wealth manager. But clients also want other things, including command of leading-edge technology.

A significant 72 per cent of respondents in Asia-Pacific already expect their wealth managers to incorporate AI into their product offering in some capacity — substantially higher than the global average of 60 per cent, and just 48 per cent in North America.

The future is here

Close to three quarters of Asia-Pacific wealth clients are perfectly happy for firms to use AI for reporting and monitoring, while 71 per cent say they would continue to use their present adviser if they learned AI was a key component of the investment advice they provide.

A majority (57 per cent) of Asia-Pacific clients even say they would consider using an AI-run platform for wealth planning without a human adviser or relationship manager. That compares to just 44 per cent of global wealth clients.

However, there are important divergences in attitudes towards AI between clients from different age demographics. Boomers are far more concerned about the accuracy of AI, with 60 per cent expressing doubts, compared to 49 per cent of millennials and just 44 per cent of Gen X clients. Some 44 per cent of boomers express concern about lack of human touch with AI, something that worries only a third of Millennial and Gen X clients. Boomers are also somewhat more apprehensive about increasing dependence on technology.

Key questions for wealth management firms include how to deal with self-directed clients in an AI future, and whether they will soon have to respond to client-mandated AI.

Alternative expertise

Wealth managers must also recognise that Asia-Pacific clients are increasingly looking for expertise in a wider range of alternative investments, including crypto and other digital assets. Some 43 per cent of Asia-Pacific respondents have already invested in these, well ahead of the global 32 per cent average.

More than a third of Asia-Pacific clients that don’t yet invest in them are now considering allocations to multi-strategy hedge funds, global macro hedge funds, venture capital, secondaries plus art and collectibles.

If the larger firms do not fill those product gaps, they may lose business to specialists and emerging wealth managers.

Elliott Shadforth, sector leader, Asia-Pacific Wealth and Asset Management, EY