The relationship between wealth managers and their clients is deteriorating as people choose to use outside advisers, new research suggests.
In a review of 50 high net worth individuals (HNWIs) by Deloitte, information obtained saw a trend towards using wealth managers as transaction execution only services.
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HNWIs, those worth between $15m-$30m, and ultra HNWIs, those worth over $30m, make up $5.5trn worth of wealth in Europe, but are less likely to grant discretionary mandates to their wealth managers.
Calum Thomson, head of wealth management at Deloitte, said the report shows despite high returns from the industry during a tough economic climate, managers had not been able to nurture trust with clients.
"The big question is ‘Has the industry put the good times to best use?’" said Thomson.
"Unfortunately, our research shows that not all wealth managers can claim to have fostered better relationships with their clients."
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By GlobalData25%-30% of wealth available
The report indicates private clients on average allow 25%-30% to be available to wealth managers, and often have several relationships with different organisations.
Although there is generally considerable wealth tied up in illiquid assets such as property, the report suggests there is considerable room for growth in the industry.
Tony Cohen, head of private client services at Deloitte, said it was clear from the research that managers had to adopt a broader approach to clients needs if they were to access this wider wealth.
"While diversification, performance and efficiency are the common influencers on the choice of wealth manager by a HNWI, wealth managers need to go above and beyond this and consider the detailed needs of each client," Cohen said.
