Three quarters of wealth managers intend to allocate more spending to enhance client services, research reveals.
New findings from Oxford Risk suggest that advisers are set to increase spending on technology for client risk suitability assessments.
The recent study with wealth managers, who collectively manage assets of around $232 billion, found that the sentiment is largely driven by client demand, as more than four out of five (82 per cent) respondents believed improved technology would help them “win” clients.
As such, 75 per cent of advisers surveyed are planning to boost spending over the next five years as they look for ways to enhance their service to clients. However, the majority (86 per cent) still claim to already have sufficient processes in place.
Oxford Risk agreed that advisers need better systems and tools to support clients, and pointed to COVID-19, rising inflation, and high levels of volatility as factors that have catalysed this demand.
Bianca Kent, Oxford Risk Australia head of client and strategy, said that technology has an important part to play in supporting advisers to better understand their clients.
“The acknowledgement that using more sophisticated technology will be a competitive advantage will not only allow them to enhance their service to existing clients, but also win new ones, and that is driving increased spending in the sector over the next five years,” Ms Kent added.
The study also uncovered a good understanding of risk tolerance across the industry, as almost 70 per cent of respondents described risk tolerance as a stable trait which doesn’t change. However, 12 per cent of advisers disagreed.
“It’s encouraging to see that the majority of wealth managers surveyed agree that risk tolerance is a stable trait which doesn’t change over time,” Ms Kent commented.
Importantly, nine tenths of advisers additionally said that they tailor their communication with clients based on differing needs.
Last month, Oxford Risk also revealed that Australian wealth managers anticipate a surge in compensation claims from clients due to failure to comprehend risk suitability, and expect tougher regulation to follow.
As such, more than three-quarters of advisers expected firmer regulatory action over the next five years, which, according to Oxford, increases the need for wealth managers to better understand risk tolerance and suitability.
“There is a widespread expectation from wealth managers that there will be tougher regulation on the issue, and we would urge them to act now and get ahead of any changes in regulation,” Ms Kent commented on the findings from March.
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