7 minute read 10 Sep 2019
Woman jumping in field Germany

How to understand the mind of the German investor

By Sebastian Schaefer

EY Germany Financial Services Consulting Wealth Management Leader

Passionate advisor for banking institutions and wealth managers from process improvement initiatives to core banking transformations. Enthusiastic football supporter. Proud husband. Father of two boys

7 minute read 10 Sep 2019

German wealth managers must redefine their value to retain existing customers and win new ones in today’s evolving market place.

Around the world, consumers are changing how they buy products, thanks to new technologies, innovative business models and disruptive brands. The wealth management industry isn’t immune to these trends, and even in Germany, where wealth clients are among the most loyal, buying habits are starting to change. This presents challenges and opportunities to service providers: from firms with rich legacies to innovative new entrants that are out to change the very definition of the industry.

Our research shows an increasing number of clients are willing to pay for financial advice – but what they value is evolving rapidly. To help wealth managers understand how best to deliver value, we surveyed 2,000 wealth management clients across 26 countries to find out what matters most to them. The global research report is available at www.ey.com/wealth2019 and highlights global trends and developments. Here, we focus on the German wealth management market and deep-dive into local client characteristics. We also provide some European context and comparison, looking particularly at Switzerland and Luxembourg, which are the most important cross-border wealth management destinations for German clients.

Our analysis pinpoints four key areas that need to be addressed by German wealth managers to gain a competitive advantage going forward:

Four key areas

Wealth managers must address each of these areas, not just to retain their current clients but also to win new ones. Our Wealth & Asset Management team believes there is a clear opportunity to make financial advice more effective and impactful by aligning it more closely with what clients value now.

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Chapter 1

Turning investor switching into an opportunity

In Germany, wealthier investors, along with millennials and Gen X, are more likely to leave their wealth managers.

According to our research, major life events drive German investors to change their wealth managers. Trends can be identified by age, product knowledge, level of investable assets, etc.

Our survey shows that 37% of German private banking investors have changed their wealth managers in the last three years and 33% plan to do so over the next three. This is evident across all wealth levels, but the shift is more obvious among the wealthiest investors and the younger age group, such as millennials. To create new strategies, and find new opportunities by offering innovative products and customer service, wealth managers need to understand why investors switch and who they switch to.

Which investors are switching

Our in-depth survey of more than 500 European investors (including more than 150 from Germany), with investable assets from US$250,000 (mass affluent) to more than US$30m (ultra-high net worth – UHNW), revealed that the wealthiest clients are more inclined to review their financial relationships.

However, German clients are more loyal to their wealth managers than the European average, and much more so than in neighboring countries such as Luxembourg. In the past three years, 37% of German investors changed their wealth management provider, compared with the European average of 43%. And 37% of German investors see “no need for changing or switching” their wealth managers, compared with 32% in Europe overall, and 35% and 26% in Switzerland and Luxembourg respectively. This reflects the satisfaction levels that some German wealth managers have achieved.

Yet almost one-third of German wealth management clients plan to switch within the next three years (see figure A1).

Switching behavior by region

For more on this topic, please read our full 2019 German Wealth Management Research Report.

Girl working on laptop Germany
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Chapter 2

Capturing clients through evolved products and services

Wealth managers must focus on clients who most value their offering, while meeting the needs of all investors.

Defining wealth management products and services

The value that clients place on the wealth management relationship is strongly influenced by products and services. A combination of individual client needs and preferences will shape the future of new client acquisition and referrals. Advances in managing personal data and the improved quality of technology-driven interactions are set to enable firms to provide hyper-personalized advice and services that both anticipate and react to changing client needs and circumstances.

Wealth managers must prioritize and provide new offerings and capabilities, first to the clients who value them the most, then to meet the increasing demand from all clients for sophisticated and specialized products and services. The technological and cost-specific limitations of providing them to all clients is a key consideration here.

Delivering client value 

Having analyzed clients’ overall willingness to switch in the previous chapter, we can segment investors by their risk appetite to see if similar patterns can be observed.

It is clear that a higher risk tolerance correlates with a greater likelihood that clients will switch within the next three years (see figure B1). Ultra-wealthy, knowledgeable clients, with high to very high risk appetite, are therefore the prime target in attracting new clients from competitors, as they’re the most likely to switch. These clients should be especially attractive targets, as they’re well suited to higher-margin products and services – they have the required assets, the right risk appetite and the product knowledge for such offerings.

Percentage of clients willingness

For more on this topic, please read our full 2019 German Wealth Management Research Report.

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Chapter 3

Digital evolution will raise the bar in wealth management

Traditional client engagement channels are still important, however voice-enabled tools and digital assistants can take us into the future.

The digital evolution from screens to mobile apps to digital assistants

Client engagement in wealth management needs to keep step with the opportunities of advancing digital innovation. First-generation digital channels such as websites are becoming less important, while mobile apps set the new standard for enhanced client engagement. But wealth managers should be aware that a new digital wave is on the horizon: voice-enabled assistants. 

Clients are beginning to demand technologies that can listen, learn, process complex language and anticipate needs – not just for basic, transactional activities, but also to manage wealth and receive financial advice. The challenge for wealth management firms is how to balance such evolving high-tech solutions with “high-touch” advisory services that offer clients a seamless and personalized experience.

Our global research revealed that the adoption rate for voice-enabled technologies is likely to be quicker in other markets around the world than in Germany. This provides an opportunity for German wealth managers to learn from other jurisdictions and industries and give clients what they’re looking for. Mobile apps are now the most preferred interaction channel in Germany, but the data shows potential for further growth. Voice-enabled assistants aren’t yet widespread, and personal interaction remains a key element in client relationships. 

We believe that wealth managers should develop their digital change agenda by including mobile apps and voice-enabled technology in their client engagement tools to keep up to date with evolving client preferences.

Keeping pace with digital change

In recent years, digital technology has evolved faster than wealth management companies – and their clients – expected. A comparison of results from the most recent EY global research study and our 2016 survey highlights how challenging it is for German wealth managers to predict future changes accurately.

For example, in 2016, clients in Germany vastly underestimated how quickly their preference for mobile applications would grow over other methods of engagement. Almost 13% of clients preferred mobile apps across the different wealth management activities, and the projected usage was only marginally higher at 15% in the next two to three years. But actual preference has since doubled: mobile apps are the preferred channel for almost 27% of German wealth management clients to engage with their provider, followed by websites and face-to-face interaction (see figure C1).

Channel across all wealth management activities

For more on this topic, please read our full 2019 German Wealth Management Research Report.

Woman working on board Germany
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Chapter 4

Aligning pricing with value through transparency and simplicity

Wealth managers are benefiting from general satisfaction with fees, but cannot take it for granted.

Explaining and demonstrating value

Although clients are broadly satisfied with the fees they pay, there are clear signs that they’re questioning those that they find confusing. They’re also dissatisfied with how they pay, although no one pricing method is predominantly preferred. German clients would like more fixed and predictable fee models to help them lock in costs. This avoids surprises and builds confidence in the objectivity of wealth advisors’ recommendations.

The solution to these concerns will likely need to come from a combination of strategies. These include greater transparency, simplified pricing structures and personalized advisory services, as well as an overall improvement by wealth managers in explaining and demonstrating value to their clients.

Maintaining trust and satisfaction

Trust and satisfaction with German wealth managers is high, especially compared with European peers (see figure D1). However, discretionary and advisory clients still fear hidden costs, with almost two-thirds of respondents sharing this concern. More than 60% of clients would shift more assets from their self-directed funds to discretionary accounts if the fees were lower.

Statement on fees (D1)

For more on this topic, please read our full 2019 German Wealth Management Research Report.


Financial advice is in greater demand, but its definition is evolving rapidly. This is a clear opportunity for German wealth managers to redefine their value and align them to changing client needs. Wealth managers should consider:

  • Taking customer-centricity to the next level by creating pricing transparency and monitoring clients’ life events.
  • Offering tailor-made products to clients based on their constantly evolving goals.
  • Pursuing an omni-channel client engagement strategy by leveraging emerging technologies and collaborating with FinTechs, while still providing the human touch for select wealth management activities depending on the client’s individual needs.

About this article

By Sebastian Schaefer

EY Germany Financial Services Consulting Wealth Management Leader

Passionate advisor for banking institutions and wealth managers from process improvement initiatives to core banking transformations. Enthusiastic football supporter. Proud husband. Father of two boys