There is a huge disparity between private clients’ and wealth managers’ views on transparency in the industry, according to research.
When asked whether the wealth management industry was transparent, 100 percent of clients answered “no”, while 100 percent of wealth managers said “yes”.
The result shows that what clients want in terms of transparency and what they receive, according to the report, are two different things.
“What clients want is openness,” said the report, conducted by consultancy Scorpio Partnership on behalf of SEI.
“Not just with transactions, performance and charges, but more broadly how and why decisions in the portfolio have been made, on what basis and how they fit in with client goals.”
Clients identified several themes which should be at the heart of their relationship with a wealth manager:
• Open communication about the financial markets and the client’s portfolio;
• A written summary on quarterly activity that provides headline information on what has been done relative to the client’s objectives;
• Sharing relevant market and product information;
• Being able to access real-time information about the portfolio when you want, how you want; and
• A simple, transparent charging structure with no hidden extras, and a frank ongoing dialogue about what is being charged and how it connects to value delivered.
There were also disparities between client expectations in other areas. Portfolio reporting was considered a high priority by clients but less important by the industry.
The desire for knowledge and client education between clients and wealth managers were closely matched, but clients placed less importance on available products and fee structures than the industry.
The research is part of a series of papers on the changing relationship between clients and their wealth managers. It was a survey of 25 private clients and 25 wealth managers.
It is the latest research by Scorpio Partnership following its work earlier this year on Futurewealth and asset allocation.