APAC’s HNWI seeking increasingly more online advice

Need for more digitally savvy financial advisors creates opportunities for wealth managers

Key points:

• Large numbers of high-net-worth individuals (HNWI) are considering changing their financial advisor and are looking for digitally savvy advisors and advanced platforms and solutions to help them manage their wealth
• The past 18-24 months have changed consumers’ preferences when it comes to the type of contact they have with their financial advisor
• Really understanding their potential clients will ensure that wealth managers can target the right audience with the right message at the right time

With the APAC region home to almost 7 million HNWIs and set to grow further in the coming years, there are plenty of opportunities for wealth managers to stand out from the crowd and attract new customers.

In 2020, there were 6.91 million HNWIs in the region, up from 3.4 million in 2011, according to Statista. Desktop research carried out by Fundamental Media found that large numbers in this group are considering changing their financial advisor and are looking for digitally savvy advisors and advanced platforms and solutions to help them manage their wealth.

Almost a third (31%) of consumers in Asia Pacific are considering changing their financial adviser in the next 12 months, research by Greenwich Associates shows. Among those expecting to change their financial advisor, 45% of respondents are doing so because they deem the fees too high. Slightly more than a third (34%) cited the lack of competitive services, while 32% said they prefer to work with a competitor or mentioned a lack of communication.

In Australia, only 75.4% of the wealthiest 30% of Australians were satisfied with their banking relationships compared to 84.7% of the bottom 30%, according to a survey by research firm Roy Morgan. And a 2018 Financial Advice Report found that during 2008-2016 the number of HNWIs in Australia increased by 41%, while the number of HNWIs using a financial advisor grew by only 16%. Similarly, less than 20% of Australian HNWIs had a private banker in 2018, compared to more than 70% in the UK.

Meanwhile, a 2019 KPMG report on the Hong Kong private wealth management market found that 64% of wealth managers felt their digital offering is well below or not meeting client expectations. ‘Scope of online services’, ‘degree of customisation’ and ‘degree of self-service’ were the top three reasons cited for why their digital offering was lagging behind client expectations.

The need for technological solutions and platforms to provide HNWIs the opportunity to manage their wealth on their own was also made clear by Greenwich Associates’ research, which found that the past 18-24 months have changed consumers’ preferences when it comes to the type of contact they have with their financial advisor. 

The majority of end investors now prefers more electronic contact with their advisor (Japan: 79%, Singapore: 77%, Australia 69% and Hong Kong 67%), although a good number of respondents also prefers a greater amount of personal contact (Hong Kong: 53%, Australia: 47%, Singapore: 40% and Japan 36%). Between 38% and 48% of consumers rely on perspectives from their social community and between 27% and 44% rely more on their own personal research.

Technology has also changed the potential client pool of wealth managers. As digitalisation has reduced overall costs, clients with a smaller investment capital who were previously not considered as prospects by most wealth managers now form a key potential new customer group.

Opportunities for wealth managers

As the region’s HNWI population is expected to increase significantly in the coming years, there will also be an increased demand for sophisticated and personalised wealth management services that offer a mixture of both online and in-person advice and support.

Wealth managers could stand out from their competitors by developing such digital offerings and advertising, ensuring they also focus on the untapped investment opportunities of the large middle-class population in the region.

It is imperative that wealth managers understand their prospective clients: through which digital channels do they want to be approached and serviced? Understanding their potential clients will not only result in more personalised advice for each client, but it facilitates that wealth managers can target the right audience with the right message at the right time. This will allow wealth managers to conduct surgical targeting and decrease their marketing costs per acquisition.