Global study, supported by TCC and Recordsure, reveals six

What happened?

The Wealth and Asset Management 4.0 study, led by ThoughtLab in collaboration with TCC, Recordsure and several other financial services firms, has published findings on how the COVID-19 pandemic has changed investor expectations. The research is based on a global survey of 2,325 investors and a separate survey of 500 investment advisory groups, private banks, trust companies, broker-dealers, robo-advisors, family offices and institutional and alternative asset management firms.

The study identifies six shifts: a move to digital channels, with 40% of investors saying digital access has become a greater priority and nine in ten preferring mobile as their channel; growing demand for ESG and purpose-led investing, with 34% of investors expected to seek ESG advice over the next two years; and a democratisation of products previously reserved for wealthier clients, with 67% of investors wanting access to alternatives.

The remaining shifts cover higher standards for firms acting in clients’ best interests, demand for lower fees and greater transparency, with only 37% of investors satisfied with provider fees, and a willingness among investors to switch providers, with 44% planning to move a significant proportion of their funds over the next two years.

Why does it matter?

TCC Head of Culture Olivia Fahy said the findings show that wealth and asset management firms now face pressure from investors across generations to demonstrate a credible ESG offering, and that interest in ESG spans age groups and wealth levels rather than being limited to younger investors.

The study suggests that fee transparency and demonstrating client-focused conduct are becoming as significant to investors as investment performance, which has implications for how firms structure their charges and communicate with clients.

Who is affected?

The findings are most relevant to wealth and asset management firms reviewing their digital capability, ESG proposition, fee structures and client segmentation, particularly firms whose client base spans multiple generations and wealth levels.

Key risks

• Investors switching providers: the study found that a third of investors moved 20% or more of their funds to another provider in the past year, with 44% planning to do so over the next two years.
• Fee dissatisfaction: only 37% of investors reported being happy with their provider’s fees, and 36% with fee structures.
• Advisor-led attrition: 62% of investors said they were likely or very likely to leave a firm to follow their financial adviser.

Actions to take

1. Review digital access and mobile channels against the finding that nine in ten investors prefer mobile as their primary channel.
2. Assess the firm’s ESG and purpose-led investing proposition across client segments, given that ESG interest was reported across age groups rather than concentrated among younger investors.
3. Review fee structures and transparency of charges, given reported dissatisfaction levels among surveyed investors.
4. Consider client segmentation and product access, given rising demand from a wider range of investors for products such as alternatives and IPOs.

Wider implications

TCC and Recordsure Group CEO Joe Norburn described the pace of change in the sector as significant, noting that investors now have a wider range of channels through which to engage with their advisers. The study was also sponsored by Deloitte, eToro, FIS, Salesforce, Appway, HCL, LexisNexis Risk Solutions, Publicis Sapient and Refinitiv, indicating broad industry interest in the findings.

The combination of digital adoption, ESG demand and fee scrutiny suggests firms may need to reconsider client segmentation and go-to-market strategy rather than treating these as separate, isolated trends.

Recommendations

The study suggests firms should take a more client-centric approach focused on individual circumstances rather than broad demographic assumptions, reflected in its finding that almost two-thirds of providers plan to offer alternatives over the next two years and more than half plan to offer goals-based planning.

Firms that have invested in digital transformation reported average increases in productivity of 13.8%, assets under management of 8.1% and revenue of 7.7%, according to the study, which may be a relevant benchmark for firms planning their own digital investment.