More than a third of UK high net worth individuals (HNWIs) thought the fees associated with their portfolios were unjustified, new research suggests.
The MDRC survey of 1,500 HNWIs found only 64.5% of those surveyed thought the fees associated with their portfolios were justified.
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This trend had been exacerbated in the first part of 2013, as many large firms have introduced new fee structures, the research said.
The research also highlights similar findings from a Deloitte study which found HNWIs and ultra HNWIs are less likely to grant discretionary mandates to their wealth managers.
‘3.4% rise in satisfaction’
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By GlobalDataDespite clients’ unhappiness with fees, MDRC’s review of wealth management firms in the UK in 2012, found a 3.4% rise in satisfaction from clients overall.
The report showed more than 50% of firms were given a ‘very good’ or better rating by customers, with smaller firms dominating the upper two quartile results.
Private banks or wealth managers were rated on a index, with scores of over 75 considered excellent, 65 and 75 as "very good", 55 and 65 would be "good", a score between 50 and 55 "acceptable" and a score below 50 would be considered "poor".
Over half of clients said the performance of their portfolios has been "good" or better, while 73.2% of clients rated their relationship manager as "good" or better.
Gap between top and bottom
There was also a disparity between firms in the top half and the bottom.
Those in the top half rated well in aspects such quality of and frequency of meeting with relationship managers (RMs), clarity of reports, understanding financial objectives, transparency of fees & charges, portfolio performance against benchmarks and value for money.
While those in the bottom half performed badly on credibility of RMs, quality and frequency of meeting with RMs, flexibility of investment solutions, portfolio performance and value for money.
Generally smaller firms out performed the larger ones with, companies with a high turn over of RMs seeing the worst results on the index.
