Wealth managers will need to change sooner due to widespread volatility and global uncertainty, which are altering how individuals invest in difficult times.
40% of respondents said managing their wealth had gotten more difficult in the last two years, with 57% blaming market volatility for their lack of financial preparation, according to the 2023 EY Global Wealth Research Report.
The report was a survey of over 2,600 wealth management clients from 27 different regions was conducted.
When it comes to baby boomer clientele nearing retirement, the proportion jumps to 69%.
Mike Lee, EY global wealth and asset management sector leader, said: “Given the ongoing market volatility, investors have a lot of questions right now and they are hungry for advice. Continued market stress is amplifying their defensive stance and appetite for both switching and adding to their portfolio. The role of the wealth manager is crucial right now and will remain in the spotlight as they evaluate their risk models, provide sound advice, and take a proactive approach to the interwoven complexities that have evolved rapidly in the past few months.”
The survey shows, there has been a 30% decrease in clients prioritising wealth transfer to family and charity as a significant financial goal in the last two years.
Protecting wealth, boosting investment returns, and maintaining financial security are currently the top three goals for investors.
Jan Bellens, EY global banking & capital markets sector leader, added: “The findings of the study are clear – investors are diversifying more so than ever, and it will come as no surprise that given recent global events, immediate access to funds poses both an opportunity and a risk. Investment has become more complex and wealth managers will need to manage the associated operational challenges – including the rise of digital assets and ESG funds, and how investors are being influenced by market trends and economic uncertainty.”
Volatility in the market drives proactive behaviour because younger investors like active investing and are more inclined to switch to it when the market is unpredictable.
Only 22% of boomers, compared to 50% of millennials, are increasing their allocation to active investment.
Millennials are three times more likely than their elders to use digital asset providers or crypto wallets, with 24% already holding an account.
The survey also highlighted investors have responded to market volatility by either investing more actively or seeking protection through savings/deposits.
Due to a fall in portfolio value, 73% of respondents changed their investment behaviour, with 34% shifting assets into active investments and 33% becoming more conservative with their funds.
More over half of respondents said they would seek more financial counsel, and 62% said they would review their financial plans in reaction to future instability.