Wealth managers clients’ appetite for certainty and greater portfolio diversification is rising amid ongoing market volatility, according to EY’s Global Wealth Research Report.

It found that investors managing private wealth were seeking more frequent meetings, favouring fixed fees as a payment model, diversifying their portfolios, and converting investment capital into cash.

More than half (51 per cent) of UK Millennial clients were worried about their investment returns in the current environment, compared to 47 per cent of Gen X and only 28 per cent of Baby Boomers.

In response, 62 per cent of Millennial and 61 per cent of Gen X investors were more likely to seek financial advice, and 61 per cent and 42 per cent were taking greater control of their investment portfolios respectively.

The report of global wealth management clients also found that many high net worth individuals were unprepared for inheritance and wealth transfer, looking towards alternative investment options, and struggling to trust artificial intelligence (AI).

While more than half (56 per cent) of clients expected AI to be part of the advice process, only 32 per cent of UK investors said they trusted AI as much as human advisers.

Data privacy was the biggest concern around AI, with 38 per cent of UK clients saying they had less trust in AI tools compared to human advisers.

One in seven (14 per cent) UK Baby Boomers did not feel prepared at all for wealth transfers, with 22 per cent finding inheritance planning more complex than a couple of years ago.

The study also found that just 35 per cent of wealth managers’ UK clients strongly agreed that they had sufficient interactions with their financial adviser where they can cover topics including investments, lending, taxes, planning, and portfolio construction.

More than half (58 per cent) of 30 to 60 year old clients had increased their interactions with their wealth advisers in the past 12 months in reaction to market volatility.

EY’s report also highlighted a shift in fee structure preference, with investors looking towards fixed and performance-based models.

Nearly a quarter (24 per cent) of European investors favoured fixed fees for financial advice, up from 22 per cent in 2023.

Clients were also worried about hidden costs, especially Millennials, with 29 per cent of UK Millennial investors concerned compared to 9 per cent and 7 per cent of Gen X and Baby Boomers respectively.

EY said that this underscored the need for wealth managers to ensure transparency in pricing strategies.

UK Millennial clients were also increasingly interested in alternative asset classes, with 57 per cent having investments in digital and crypto assets compared to 34 per cent of Gen X and 7 per cent of Baby Boomers.

The report noted that European investors who had switched or moved their money from their primary wealth management provider usually did so for three key reasons: better investment performance and returns, access to a wider array of investment products and services, and a better experience with digital tools and technology.

“As European markets continue to face economic challenge and geopolitical uncertainty, wealth managers are flexing to tailor their advice and offerings and respond to changes in client demands,” commented EY UK wealth management leader, Roopalee Dave.

“Challenging times require more frequent communication, assurances that risks are being managed, and advice that keeps pace with external impacts. All this while still managing broader change to benefit investors, from tech transformation and digitalisation to increased sustainability and risk management.

“A growing number of Millennial investors are seeking to actively manage their wealth and diversify their portfolios.

“As they increasingly turn to social media platforms for financial guidance – more so than older generations – it is crucial for wealth managers to possess the expertise to advise on both emerging and traditional asset classes.

“Those wealth managers who are agile and digitally enabled are likely to achieve commercial success in this competitive landscape.”

---