Financial planners should employ more client-centric strategies and technologies in order to retain their clients, warns a new Ernst & Young (EY) report.
According to a report, titled The experience factor: the new growth engine in wealth management, one in four Australian clients is willing to switch wealth managers under the right circumstances.
EY Oceania wealth and asset management leader, Antoinette Elias, said this research should compel the local industry to "sit up and take notice".
"For Australian clients, better pricing and better portfolio returns were the key drivers of change, but the research also found a need for greater transparency around fees and a stronger focus on goals-based planning," she said.
"Australian clients also indicated an increasing willingness to embrace new technology, with one in four open to investing via automated advice services, such as robo-advisers. In this environment, wealth managers will need to differentiate themselves around customer experience if they want to capture market share."
The report also shows that while wealth managers lack a common definition of client experience, there is a common view among the report's survey respondents, who said they value performance, engagement and trust.
The areas where wealth firms appear to be out of step with client expectations include transparency, advice channels and the role of the adviser.
"Clients are eager for a new level of transparency that includes rating their advisers and connecting with similar clients in public forums," the report stated.
"Clients are significantly more open than firms to adopting digital channels for wealth advice, not just service. The financial adviser may become more like a financial therapist in the future, helping clients with spending habits or reaching life goals instead of strictly providing standard asset allocation advice or other activities that could be automated."
Ms Elias said she believes client experience will be the "linchpin" that will make or break a firm.
"In an industry where advances in technology, new types of competition and client expectations are changing rapidly, firms that challenge traditional norms while remaining true to their core value proposition will be better positioned to succeed," Ms Elias said.
"The rules of the game have changed. In order to attain growth, managers must now learn to compete with man, machine and hybrid-based firms to retain and attract assets."
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