Satisfying increasingly demanding clients has surpassed regulation as the top challenge for Canadian asset and wealth management firms, according to a new survey from RBC Investor & Treasury Services.
The firm reports that its latest industry survey, which garnered responses from 89 firms in the second quarter, found that firms see increasing client expectations as their top challenge in the year ahead.
In fact, rising client expectations jumped to the top of the list of firms’ challenges — from eighth place in last year’s survey — replacing regulatory demands as the leading issue for managers.
“The increased focus on addressing client expectations coincides with numerous changes in investor behaviour impacting asset and wealth managers,” the firm said.
Among other things, these evolving expectations include greater investor interest in performance-based fees for actively managed funds, growing demand for socially responsible investments, and shifting preferences for service delivery among various generations of investors (gen Z, millennials, gen X and boomers).
The survey also found that firms are generally optimistic about their ability to meet these challenges, with 23% claiming to be “extremely confident” about their ability to adapt, up from 15% last year.
To meet the challenges, firms said their top priorities were investing in tech, automating processes and managing client relationships.
“All three choices present potential opportunities to generate efficiencies, reduce costs and improve client experience,” RBC I&TS said.
Similar trends were also highlighted in new research from Boston-based Cerulli Associates.
For instance, Cerulli reported that 49% of affluent investors would like to consolidate their assets at a single firm, but that most don’t because the task is an administrative chore.
“While the idea of consolidating finances is appealing, the steps needed to get there are not,” said Scott Smith, director of advice relationships at Cerulli, in a release. “Investors want the outcome without the laborious process of getting there.”
Cerulli recommended that firms focus on using tech to help improve client experience and better serve the next generation of investors.
“Using technology to assist investors with asset consolidation is expensive, but this type of high-touch service can create client advocates more likely to promote a firm among their peers,” Smith said.
“Investors have come to expect their providers to seamlessly serve them across any possible communication channel with no degradation in functionality across industries,” he added.