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Fees, Returns, Planning, All Up For Client Review - Survey

Editorial Staff, 16 September 2020

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New research shows that the pandemic has led investors to reassess expectations of their wealth manager, with a third ready to "jump ship" if managers can't find the right balance of services and costs. It comes as Coutts has announced that it is lowering its fee structure.

Wealth managers must prove their value or risk a third of investors jumping ship post-lockdown, a new study of roughly 1,000 investors with over £50,000 worth of assets has shown. The effects of the pandemic on their financial planning has elevated a search for value for investors. The study by wealth manager Netwealth, also found that among those considering switching providers, the three main reasons were high fees, poor investment returns, and poor financial planning services, "all areas that have been under discussion for some time within the wealth management industry," the report said.

Investors want more online functionality and financial control as a result of the chaotic period, with roughly two-thirds wanting to track their portfolios and manage investments online, including opening and closing accounts, subscribing to ISAs and transferring pensions. As similar recent surveys have shown, clients want greater transparency of fee structures. "Managers who are unable to do so are likely to struggle," the study said.

Over half of investors (56 per cent) surveyed also placed greater importance in having access to online financial planning tools. Equally, they see maintaining advisors expertise as critical, but in an anywhere context. A majority now expect online meetings – with shared screens if necessary – to complement or replace physical meetings post-lockdown. Also over half now (53 per cent) see receiving research and market commentary as more important.

The survey comes as Coutts has announced fee structure changes in a one-time all-in fee introduction of £5,000 for financial planning and a one-time flat fee of £2,000 for investment advice. The wealth manager and private bank also announced this week that it is removing implementation fees. It comes with fine print but is evidence that firms are reassessing fees on the back of mounting client concerns that they are too opaque and therefore hard to justify. The wealth manager, which is part of the commercial and private banking division of NatWest, said the new pricing marks it as one of the "best value propositions on the HNW market."

"Behind the scenes, technology has been fundamental for Coutts being able to reduce these charges," it said.

The Netwealth study called the current challenging market environment partly to blame for a subdued investment performance, but that "clients are increasingly unlikely to tolerate the contribution of high costs to lower returns, with many taking the opportunity to examine the fees they pay in greater detail during the lockdown period."

“In a post-lockdown world, investors are calling for fundamental changes to their service and modern wealth management will need to demonstrate that it is providing real value for money. This means achieving consistent returns over time, net of all fees, while also combining technology-enabled portfolio insight and financial planning tools with high-quality, expert advice,” Charlotte Ransom, CEO of Netwealth, said.

“It is now the industry’s responsibility to take swift and sustainable action on these learnings to ensure it is genuinely fit for purpose post-lockdown and beyond, and to give investors’ confidence in their financial futures,” Ransom added.

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