Wealth managers are being picked for their performance and abandoned for their high levels of charges, new survey research from Netwealth has shown.
Respondents, who were all between the ages of 56 and 65 with £500,000 or more in investible assets, were asked what would make them consider switching to a different provider.
The largest number (42%) said it would be high levels of charges with their current provider.
Fees were cited most commonly as a reason to leave, above poor investment returns (39%), a change of relationship manager (38%), and low quality or non-existent financial advice from their current provider (33%).
When picking a provider, respondents gave a different picture. Investment performance was ranked the most influential factor when picking an investment and saving solution (30%), closely followed by access to online tools (29.5%) and recommendation by family and friends (29%).
For those seeking financial planning advice, the most influential factors when choosing a provider were trust and reputation of the adviser or firm (24%), followed by convenience such as online meetings and flexible hours) (23%), and recommendations from friends or family (22%).
As for describing their ideal investment manager, the most popular option was ‘fully digital with low fees’ (31%), followed by ‘hybrid’ (a digital interface alongside access to expert advisers) (25%), with 23% citing a traditional and relationship-led wealth manager.
Asked where most of their wealth came from, this cohort ranked their work salary first (47%), followed by a business sale (43%), inheritance (41%) and family gifts (36%).
Charlotte Ransom, CEO of Netwealth, said: “Financial planning and investment services are rightly seen as essential tools for protecting and growing capital throughout a working lifetime. While investment performance remains a major attraction, there is growing awareness of the impact high fees can have on long-term, net-of-fee returns and, ultimately, on financial outcomes.
Investors are increasingly asking whether the net returns on their investment pots truly justify the cost, especially in light of the consistent outperformance of strategies implementing lower cost passive funds compared to more expensive active managers in recent years.
This has prompted a notable shift in client behaviour. Trust remains the foundation of any long-term wealth management relationship and personalised advice continues to play a central role. However, affluent individuals are becoming more discerning, seeking out firms that offer regulated, tailored advice alongside cost-effective, performance-aligned solutions that help them achieve their financial goals.”
