In other words, one in four wealth management clients around the world expect to move a material slice of their wealth between providers by the end of 2025. If that forecast proves accurate, the amount of money in motion could be measured in billions.
The effect could be even greater in some regions. A majority of wealth management clients in Asia-Pacific (57%), the Middle East (59%) and Latin America (62%) expect to move assets, add new providers or switch outright during the next three years. And while clients in North America are less likely than average to switch (25%), when they do so, they are more likely than others (18%) to move the majority of their assets, so the scale of capital transfer could still be significant.
Clients have always switched between wealth managers, but what’s new is investors’ increasing willingness to spread their assets over a larger number of firms. Far from consolidating their assets in search of simplicity, clients are becoming more inclined to shop around in search of the expert advice and support they need to make sense of a challenging environment.
This shift in behavior could have a far-reaching impact on the industry. The research shows an average anticipated increase of 12% in the number of providers that investors expect to work with over the next three years. This is, in effect, a prediction for falling average wallet share.
These findings prompt three questions:
1. Why is this happening?
The answer lies in the increasing complexity facing investors. Worldwide, 40% of clients think managing their wealth has grown more complex in the last two years, and 45% say the same about their investing needs. “That’s partly due to the exceptional market volatility of 2022 and early 2023, but it also reflects the increasing variety and sophistication of the investment universe.” Unsurprisingly, clients’ leading motives for switching are centered on the desire to manage their risks and returns better. The biggest drivers identified by the survey are investment performance (18%), diversification (14%) and market volatility (13%).
2. Where are clients planning to move their money?
The research shows that the desire for specialization is shaping the kind of wealth management providers that clients want to work with in future. Every type of wealth manager will have an opportunity to expand their client base between now and 2025, but it’s FinTechs that are expected to be the biggest beneficiaries on a relative basis compared to other provider segments.