EY's Antoinette Elias

The rate of advice clients in Australia switching their adviser is set to surge in the next three years, according to a report published by consulting firm EY.

While Europe and North America have less people intending to switch advisers in the next three years than previously, the dynamic is reversed in Australia, Africa and the Asia Pacific region as a whole, the report reveals.

Thirteen per cent of Australian advice clients switched their advice provider in the last three years, however 40 per cent intend to switch in the next three years. In North America 40 per cent switched their adviser in the last three years, while only 28 per cent intend to do so in the coming period. Europe reduces from 43 per cent previously to 39 per cent going forward.

The EY report states that “shifting demographics” and “a flood of new digital offerings” is driving the trend, with people becoming more aware of advice offerings on the market and more willing to seek them out.

The results are a good indicator of the temperature of the advice industry in specific regions, Antoinette Elias, EY’s Oceania wealth and asset management leader, says.

In Australia, clients are telling advisers that “no one single provider” can meet all their needs, with major life transitions being the most common catalyst for people seeking a change in their advice provider, Elias says.

“If someone’s having a child, starting a job, getting married, sending children to university, or starting a new business… there’s actually quite a lot of individually fundamental drivers that lead to switching,” Elias tells Professional Planner.

Boudewijn Chalmers, EY’s wealth and asset management director, agrees that major life events are often what trigger people to review their position.

“Those key life events… while their focus might initially be on something else, they are the moments that people review and rethink their priorities,” Chalmers explains. “For example, having a child its typically the moment that individuals or families start reviewing protection insurance, savings and investments.”

The other factor leading to unrest, which the Hayne royal commission brought into sharp focus, is the value – or lack thereof – of different advice offerings on the market, or what Elias calls “the value that they see with their existing service provider compared to what they’re looking for”.

“Things like pricing, capabilities, personal attention, quality, reputation, product and technology,” she adds.

Elias says the research indicates the best way advisers can prevent their clients switching is to “remain relevant” by looking for the key events and talking to them about it.

“One of the challenges the survey highlights is that because clients are saying that one adviser can’t necessarily meet all of their needs… it does challenge advisers more to be across all the information that’s relevant for the investor,” she says.

Elias adds that for an increasing number of clients, technology and the use of things like robo-advice and chatbots is also key to staying relevant and “deepening the relationship”.

“People are telling us they’re invested in digital solutions, so digital and voice enabled technology is one way for advisers to ensure that they are connected with their clients, and in a way that is efficient for the adviser as well.”

 

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