Investors in the Asia-Pacific region are more likely than their counterparts in the rest of the world to switch their wealth manager as market volatility and global uncertainty shapes investment behavior, EY said in a report.
As many as 57% of the respondents in the Asia-Pacific plan to add a new adviser, move money to another service provider, or switch altogether over the next three years, according to the 2023 EY Global Wealth Research Report, which surveyed more than 2,600 wealth management clients across 27 geographies. That figure is higher than the 45% global average, EY said in a May 26 press release on the report.
The trend is particularly strong in mainland China, where 70% of the respondents said they were looking for a change, as well as Singapore, where 64% made the same comment. Investors in Hong Kong and Australia were relatively less keen to change, with 44% and 41% of respondents, respectively, seeking a change in their advisers. Millennial investors are more likely to switch compared to baby boomers, who were born between 1946 and 1964, and may have already retired or are close to retirement, according to the survey.
There is "huge demand for expert wealth advice" amid changes in the macroeconomic and geopolitical environment, said Mark Wightman, EY Asia-Pacific wealth and asset management consulting leader. "The needs across Asia-Pacific are quite different, but one thing we have seen across the region is a clear signal toward more active allocations and strong focus on switching or adding new wealth management providers, underscoring the opportunities for companies outperforming peers in this environment," Wightman added.
Market uncertainties
The EY study found that 36% of the respondents in Asia-Pacific believe managing their wealth has become more complex in the last two years.
Clients in the region are now more focused on protecting wealth against losses and inflation, with 44% of respondents ranking that as their top financial goal, compared to survey results in 2021 when 55% of respondents said their main goal was to ensure adequate income and financial security.
"Given volatility in markets and uncertain macro environment, it will come as no surprise that the main focus for investors now is on protecting their wealth and making sure their assets are keeping pace with persistent inflation pressures," Wightman said.
Mainland Chinese wealth management clients also have the strongest appetite for active investments, as EY found that 54% of respondents increased allocations, compared to investors in Hong Kong and Japan, where only 31% increased allocations.
The attitude toward passive or active investment also differs in the generational divide among investors. Younger investors are more likely to switch to active investment amid volatility. Some 55% of millennial investors increased allocations to active investments compared to just 33% of baby boomer investors, according to the EY report.
Millennials are also more likely to use digital assets providers or cryptocurrency wallets than their older counterparts, with 32% of millennials already having an existing relationship with such a service.