How do you build value when clients want more than wealth?2019 Global Wealth Management Research: Switzerland key findings
2019 Global Wealth Management Research: Key findings for Switzerland
Bruno Patusi, Partner
EY Wealth & Asset Management Leader Switzerland
An increasing number of clients are willing to pay for financial advice, but what they value is evolving rapidly. To better help wealth management providers build solutions that meet these changing expectations, EY surveyed 2,000 wealth management clients across 26 countries to understand what matters most to them.
For further insights, please visit ey.com/wealth2019.
Urs Palmieri, Associate Partner
EY Wealth & Asset Management Advisory
Contacts
1. The rise of client switching
2. Delivering high-value solutions
3. Digital and voice-enabled technology
4. Rethinking pricing models
5. Methodology
Page 2 EY 2019 Global Wealth Management Research
The rise of client switching
One-third of clients plan to switch wealth management providers over the next three years. What can your firm do about it?
• Plans to switch increase with wealth but decrease with age and level of investment knowledge.
• Clients switch for value, but their definition of value is complex and multidimensional.
• Independent advisors and universal banks are expected to see the greatest growth. Swiss clients are not yet ready to entrust their assets to FinTechs.
The rise of client switching
EY 2019 Global Wealth Management Research Page 4
32%
43%
35%
32%
39%
51%
Global clients
Europe clients
Switzerland clients
% of respondents
Moved assets in the last three years Plan to move assets in the next three years
Who is switching
EY 2019 Global Wealth Management Research Page 5
Half (51%) of Swiss clients are looking to move money from wealth management firms in the next three years, a higher propensity than European counterparts.
Significant opportunity to attract new assets in the
Swiss client base
Key Life EventsGlobalclients
Europeclients
Swissclients
1. Changing job or starting a new/own business 61% 65% 50%
2. Inheriting/receiving money 49% 57% 67%
3. Getting married 48% 52% *
4. Separation or divorcing 43% 58% 60%
5. Sending children to college 39% 53% *
6. Buying a house 39% 51% *
7. Retiring 38% 50% 62%
Why clients are switching
This movement of money happens most often during major life events, typically when clients start a new business, inherit money or plan for retirement.
Page 6 EY 2019 Global Wealth Management Research
% of respondents going through a life event, that have also moved
assets in the last three years
* There are low sample sizes for Switzerland clients that indicated they had been through the following specific life stages or they consider these events not to be significant enough; sending children to college (6) getting married (7) and buying a house (8)
Why clients are switching
A firm’s qualifications and creditworthiness are key differentiators for Swiss clients, they are important enough for 27% to switch for when evaluating a relationship.
Page 7 EY 2019 Global Wealth Management Research
27% of Switzerland clients place very high importance
on competency and creditworthiness
Corporate and social responsibility is becoming
more important whenselecting a firm
16%
20%
12%
10%
4%
8%
20%
16%
16%
16%
29%
27%
20%
22%
22%
22%
22%
25%
18%
16%
27%
31%
29%
25%
27%
27%
24%
22%
16%
14%
0% 50% 100%
Wealth management qualifications
Creditworthiness
Corporate social responsibility
Transaction processing, reporting
Brand reputation
Superior investment performance
% of respondents
Critical factors when evaluating quality and reputation
No bearing Low Moderate High Very high (would switch for)
Where clients are going
Clients in Switzerland will typically use over 4 different types of wealth providers, this increases for clients with higher levels of financial knowledge.
Page 8 EY 2019 Global Wealth Management Research
4.8
4.44.5
4.8
4.34.5
2.0
4.0
6.0
Global clients Europe clients Switzerland clients
Ave
rag
e n
um
be
r o
f d
iffe
ren
t w
ea
lth
pro
vid
ers
Current number of different wealth providers used
Future expected number of wealth providers used
5.3Future
relationships
4.0Future
relationships
High Knowledge levels Low Knowledge levels
Switzerland clients with…
11%
22%
12%
-2%
-6%
8%
-13%
-12%
42%
39%
16%
28%
-5%
2%
-9%
-2%
Where clients are going
External asset managers are those firms likely to gain from this movementbesides the universal and private banks. Penetration of Neo-banks and FinTechsin Switzerland is much lower compared to Europe and the rest of the world.
Page 9 EY 2019 Global Wealth Management Research
Increase or decrease in average
% of respondents, i.e. net change of expected usage of type of provider in the next 3 years
* “FinTech” refers to new technologically-enabled services that enable investors to handle investment activities without the need for human interaction; Note: some categories (not relevant for Switzerland) were left out
Global clients Switzerland clientsEurope clients
19%
18%
6%
4%
-4%
-5%
-6%
-11%
FinTech* and Neo-Banks
Independent advisor / EAM
Full-service / Universal bank (e.g. UBS, CS)
Family office
Independent Asset/Fund manager
Private bank
Online banks
Retail banks
Delivering
high-value solutions
The future of wealth management will focus on outcome-based solutions that provide easier, faster and more personalized ways of matching products and services with real-time client demands.
• Many clients want advice and planning but are holding back.
• Though clients are increasingly thinking less in terms of products, specific segments continue to see high value and should not be ignored.
• Leading providers must balance offering individual products and services with simple, clear solutions that meet client needs.
Delivering high-value solutions
26 May 2019 EY 2019 Global Wealth Management Research Page 12
The majority of Swiss clients express interest in financial advice and planning, yet half remain on the sidelines.
Capturing clients on the sidelines
There are a large number of clients that are considering to use holistic financial advice and planning services –
yet many clients are unwilling to share all
data to enable a consolidated view across
all providers
27%
29%
29%
29%
35%
33%
37%
67%
65%
61%
61%
57%
55%
51%
0% 30% 60% 90%
Tax planning
Holistic advice, coaching on life goals
Advice on non-investment financial services
Asset allocation and portfolio management
Personal financial budgeting and planning
Insights into market trends
Financial education and training
Use now Considering / planning to use
% of respondents
Actively managed funds
AnnuitiesSRIs
Derivatives e.g. futures
Individual bonds
Individual stocks
IPOs/rights issues
Passive based funds
Private placements / VC
Tax-exempt investments
Advanced risk tools advice ESG advice
Specialized investing advice
Asset allocation by advisor
Market trends insightsFunds selection by advisor
Trade execution
Non-investment services Estate planning
Philanthropy
Healthcare, retirement planning
Holistic goals advice
Personal financial planning
Business financial planning
Tax planning
AM division accessCB division access
IBD access
Concierge services
Consolidated reporting
Daily financial management
Family office set-up
Financial education
Real estate investingNext gen. services
10%
40%
70%
10% 40% 70%
Providing solutions while meeting product desires
Wealth managers can convert and capitalize on the products that have high consideration levels.
Page 13 EY 2019 Global Wealth Management Research
Pro
du
ct C
on
sid
era
tio
n
Product Usage
High usage
Switzerland clients
High consideration
Note: This chart does not include ‘alternative investments’Note2: IBD – Investment banking division; CBD – Corporate banking; AM – Asset management; SRI – socially responsible investing
Providing solutions while meeting product desires
In the product and service proposition Swiss clients are prepared to switch for key differentiators, such as the exclusive access to products.
Page 14 EY 2019 Global Wealth Management Research
12%
12%
8%
12%
12%
8%
14%
16%
2%
20%
24%
25%
18%
24%
18%
18%
18%
25%
27%
24%
22%
29%
18%
24%
25%
27%
31%
18%
20%
24%
22%
29%
33%
27%
24%
27%
24%
22%
22%
20%
18%
18%
16%
16%
14%
0% 50% 100%
Access to exclusive products
Specialized products (alternatives)
Access to lending (mortgages)
Access to insurance-dedicated funds
Broad range of investment products
Global reach and offering
Access to low-cost management
Access to non-wealth services (banking)
Access to active management products
% of respondents
Critical factors when evaluating the proposition
No bearing Low Moderate High Very high (would switch for)
24% of clients value access to exclusive
products - being the most important factor for
clients, enough to switch
Specialised products are also an important
differentiator for one in five clients
51% of Switzerland clients value the global reach and offering a firm can provide
Providing solutions while meeting product desires
Clients in Switzerland place the highest overall value on receiving strategic investment advice as part of the wider advisory capabilities.
Page 15 EY 2019 Global Wealth Management Research
51% of Switzerland clients highly value strategic
investment advice when evaluating wealth firms
24% of clients place critical value on a firm’s ability to provide life coaching and
holistic goal planning10%
10%
14%
6%
16%
4%
31%
31%
14%
16%
18%
25%
18%
16%
22%
31%
25%
41%
18%
24%
33%
33%
27%
18%
24%
20%
18%
14%
14%
12%
0% 50% 100%
Life coaching, holistic goal planning
Access to product research and analysis
Provide strategic investment advice
Specialized expertise (financial, health,retirement)
Market trends insights
Knowledge of tools for min. risks andmax. returns
% of respondents
Critical factors when evaluating advisory capabilities
No bearing Low Moderate High Very high (would switch for)
Achieving clear outcomes for clients
The consideration of using planning services rises with certain life events. Following a separation, retirement or having a child Swiss clients consider using financial planning.
Page 16 EY 2019 Global Wealth Management Research
% of respondents considering usage
The following service types received higher interest from Swiss clients compared with their Global and European counterparts:
1. Next generation services e.g. wealth transfer
2. Tax planning
3. Estate planning
4. Healthcare, aging and retirement planning
5. Financial education and training
6. Holistic advice, coaching on life goals
Most relevant opportunities to link planning services for Swiss based clients
44%
44%
40%
37%
31%
31%
30%
28%
17%
0% 25% 50%
Having a child
Separation or divorcing
Retiring
Inheriting/receiving money
Buying a house
Sending children to college
Starting a new business
Getting married
Leaving a job
Digital and voice-enabled technology
Client preferences are rapidly changing toward digital and voice-enabled assistants not just for basic, transactional activities, but to manage wealth and receive financial advice.
• As clients embrace new digital channels, first-generation digital channels are getting pushed to the side.
• Digital and voice-enabled assistants represent the next digital wave clients prefer them more for financial advice than transactions.
• Despite their propensity for all things digital, many clients do not want to lose the human touch.
Digital and voice-enabled technology
EY 2019 Global Wealth Management Research Page 18
Keeping pace with digital change
Robust cybersecurity and data privacy are still a critical features for Swiss clients when they evaluate relationships at wealth management firms.
Page 19 EY 2019 Global Wealth Management Research
18%
12%
8%
10%
2%
16%
8%
6%
14%
14%
29%
16%
14%
27%
20%
31%
27%
29%
24%
29%
33%
20%
20%
20%
16%
22%
20%
25%
33%
24%
39%
29%
25%
24%
20%
20%
18%
14%
14%
14%
0% 50% 100%
Access to FinTech solutions
Simple, frictionless digital experience
Simple, intuitive processes (paperless)
Remote access to advisor
24x7, any device, anywhere digital access
Access to online portfolio reports
Robust cybersecurity and data privacy
Access to self-service capabilities
% of respondents
Critical factors when evaluating client technology
No bearing Low Moderate High Very high (would switch for)51% of clients place critical
value on digital access, anytime anywhere
53% of clients highly value a firm’s robust cybersecurity
and data privacy
Note: “FinTech” refers to new technologically-enabled services that enable investors to handle investment activities without the need for human interaction
2016 survey findings 2019 survey findings
2016 actual
preference
2019 projected
preference
2019 actual
preference
2022 projected
preference
Mobile applications 10% 13% 53% 67%
Website access 35% 37% 18% 10%
Face-to-face 33% 25% 16% 12%
Phone calls 16% 19% 10% 6%
Email/text n/a n/a 2% 2%
Web conferencing n/a n/a 0% 1%
Social media 5% 6% 0% 0%
Digital assistant n/a n/a 0% 6%
Keeping pace with digital change
Page 20 EY 2019 Global Wealth Management Research
Increase or decrease in actual or preferred
usage (% of respondents)
Note: 2016 figures taken from EY’s Could your clients’ needs be your competitive advantage?
Client demand for technology in Switzerland is focussed on mobile led wealth activities.
Blending high-tech with “high-touch”
There is a fast growing preference to use mobile apps in Switzerland, not just across transactional elements, but also for receiving financial advice.
Page 21 EY 2019 Global Wealth Management Research
Executing transactions
Learning about products and services
Monitoring/analysing results
Getting an alert on portfolio deviations
Rebalancing portfolio/asset allocation
Receiving financial advice
% of respondents
69%
76%
53%
65%
57%
67%
53%
71%
41%
61%
47%
61%
12%
6%
18%
10%
20%
12%
20%
12%
33%
16%
8%
6%
10%
6%
6%
4%
16%
2%
2%
4%
10%
12%
18%
6%
10%
10%
18%
16%
8%
12%
25%
12%
14%
4%
22%
18%
6%
4%
2%
2%
4%
6%
2%
2%
6%
2%
8%
TodayIn future
TodayIn future
TodayIn future
TodayIn future
TodayIn future
TodayIn future
Mobile apps Website access Phone calls Face-to-face Email/text Digital assistant/chatbot
Leading the next digital wave
The Swiss clients anticipate faster adoption of mobile apps for receiving financial advice. Firms will need to reconfigure their digital delivery model to meet these expectations.
Page 22 EY 2019 Global Wealth Management Research
-14%
-3% -4%
+11% +10%+14%
-40%
0%
40%
Global clients Europe clients Switzerland clients
Ch
an
ge
in
% o
f re
spo
nd
en
ts
Be
twe
en
cu
rre
nt
an
d f
utu
re c
ho
ice
Face-to-face: financial advice
Mobile app: financial advice
16% - 12%
53% - 67%
18% - 15%
27% - 37%
67% of Switzerland clients will prefer adopting mobile apps as a primary channel to receive financial advice,
up from the current proportion of 53%
Face-to-face interactions remain selectively
important to Swiss clients but less so than for their European counterparts
Rethinking pricing models
Many clients do not trust they are charged fairly; firms must better demonstrate value with greater transparency and choice.
• Wealth managers are struggling to communicate value to clients.
• Clients struggle to understand how much they pay and are concerned about hidden costs.
• Clients are dissatisfied with how they pay and show a preference for simplified price structures.
Rethinking pricing models
A desire for clarity and simplicity
Compared to other regional results, Switzerland clients have poorer awareness levels of their advisory, trading and product fees. More can be done to improve transparency.
Page 25 EY 2019 Global Wealth Management Research
I am aware of advisory, trading and product fees (including inducements), and how much I am paying
I am not aware of all the advisory,trading and product fees that I am paying
I am aware that I am paying advisory, trading and product fees (including inducements), but I do not know the exact amounts
56%17%
27%
Global clients
41%
27%
31%
Switzerland clients
44%
22%
34%
Europe clients
A desire for clarity and simplicity
The research indicates that Swiss clients care a lot about the transparency of the fees but less so about the effective levels of fees they are paying.
Page 26 EY 2019 Global Wealth Management Research
10%
8%
8%
20%
18%
33%
27%
25%
18%
20%
31%
27%
24%
18%
14%
0% 50% 100%
Transparent pricing andperformance results
Fee payment method
Low competitive fees
% of respondents
Critical factors when evaluating pricing and transparency
No bearing Low Moderate High Very high (would switch for)24% of clients place critical value on the transparency
around pricing and performance results
Only 14% of the Swiss clients place very high importance on the level of fees they are
paying
Many clients do not think they are charged fairly
While Swiss clients are more likely to trust being charged fairly, a significant minority of Switzerland clients do not understand how their advisor is compensated.
Page 27 EY 2019 Global Wealth Management Research
I understand how my wealth manager or advisor is compensated
I trust my wealth manager or advisor to charge me fairly
Strongly disagree Disagree Neutral Agree Strongly agree
% of respondents
3%
5%
4%
13%
16%
22%
28%
25%
18%
32%
31%
25%
21%
19%
25%
0% 50% 100%
Global clients
Europe clients
Switzerland clients
3%
3%
4%
14%
19%
29%
28%
23%
16%
31%
28%
29%
21%
23%
18%
0% 50% 100%
Global clients
Europe clients
Switzerland clients
Demanding alternative pricing models
When it comes to the way Swiss clients currently pay, a significant proportion indicated a preference to change the method of payment.
Page 28 EY 2019 Global Wealth Management Research
39%would like to
keep the same payment method
61%would like to change their
payment method
Switzerland clients on average…
59%
57%
56%
54%
54%
52%
49%
47%
43%
39%
0% 50% 100%
General wealth management advice
Specialized financial advice
Specialized investment products
Discretionary wealth management
Standard investment products
Holistic financial planning services
Special access
Financial management and concierge services
Transaction services
Reports and analysis on my investment portfolio
% of respondents
Change the current payment method
Demanding alternative pricing models
There is no one specific preferred payment method, but Swiss clients welcome alternative methods to the currently prevailing AUM based fee model.
Page 29 EY 2019 Global Wealth Management Research
54%
6% 8%12%
5%9%
6%
36%
12% 10%
18%
4%7%
13%
0%
15%
30%
45%
60%
% o
f re
spo
nd
en
ts
Current pricing method Future pricing preference
Methodology
We asked 51 wealthy individuals what they value in their wealth relationships
Page 31
51
3
29
19
6
5
13
27
7
21
23
9
42
Switzerland clients
MillennialsGeneration X
Boomers and beyond
Mass affluentHigh net worth
Very high net worthUltra-high net worth
High knowledgeAverage knowledge
Low knowledge
FemaleMale
1Source: 2018 Capgemini’s World Wealth Report2Africa refers to South Africa data only*Switzerland is a sub-selection of the Europe survey sample
Survey respondents
In 2018, we conducted a comprehensive survey of 2,000 clients in 26 countries to understand their changing investment needs, behaviours and value perceptions.
RegionSurvey sample (% of total)
Total HNW wealth(sum total)1
Total HNW wealth(% of total)
North America 32% US19.8 tr 28%
Latin America 11% US$8.7 tr 12%
Europe 25% US$15.9 tr 23%
Switzerland* 2% US$1.2tr 2%
Middle East and Africa2 4% US$4.2 tr 6%
Asia-Pacific 28% US$21.6 tr 31%
Total 100% US$70.2 tr 100%
HNW global wealth distribution
Age group categories
• Millennial: born 1981—1997 (age 21—37)
• Gen X: born 1965—1980 (age 38—53)
• Boomer: born 1946—1964 (age 54—72)
Levels of investable assets (in US$)
• Mass affluent: $250,000 to $999,999
• High net worth (HNW): $1m to $4.9m
• Very high net worth (VHNW): $5m to $29.9m
• Ultra-high net worth (UHNW): $30m to $100m
EY 2019 Global Wealth Management Research
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