Despite the rapid rise of self-service wealth platforms, investors still prefer a personal financial adviser over robo or digital solutions, a new report finds.
Wealth management tools are becoming increasingly digital in response to the growth of the young, mass affuent segment. These investors are known for being digitally savvy, and their preferences as well as outlook are bound to change the wealth management landscape in the years to come. In Asia alone, it is projected that the younger generation will inherit US$2.5 trillion of family wealth by 2030.
The digital trend notwithstanding, 72% of investors prefer to retain the human touch when it comes to advisory services, consisting of adviser-led relationships (35%) and hybrid or “phygital” (a combination of digital and physical) relationships (37%), according to the report.
The report on the advisory industry was launched by Navigator Investment Services, an integrated investment platform under Singlife with Aviva, in collaboration with Ernest & Young Advisory.
This correlates with a 2022 CFA Institute study which finds that 66% of retail investors consider their primary financial adviser as their most trusted source for wealth management advice, far surpassing online research (9%) and friends and family (7%).
In the Navigator report, 34% of respondents say that “trust that their advisers will act in their best interests” is the top attribute for selecting a wealth management provider. This is followed by the ability to achieve high returns (21%), their commitment to ethical conduct (15%) and whether they are a trusted recommendation (15%). Fees are the least important consideration (7%).
The report also reveals that investors are more likely to engage advisers during major life events, such as starting a new business (61%), buying a home (60%), or inheriting money (59%).
“While the rate of digital adoption has been increasing, the desire for a greater human touch continues to grow in tandem,” says Navigator chief executive officer Akhil Doegar. “Our report validates the value of advisory services as a highly trusted source of advice that will not be easily replaced by self-directed, digital investment options.
“These observations bode well for financial advisers, but in order to sustain that competitive edge, they will need to address the critical blind spots to truly enhance client value propositions.”
Han Wee Tan, partner at EY, adds: “We believe that the role of advisory remains paramount – particularly in times of uncertainty. Financial advisers play important and diverse roles in their investors’ life: as a consultant across life milestones; a confidant during good and bad times; and a sentinel safeguarding them against emotional investment decisions. Advisory requires dedication, hard work and communication to earn not just superior returns but, importantly, the trust of investors.”