Wealth advisers urged to offer better digital and ESG services

Date: 05 Apr 2022

Silvia Ricciardi

Poor digital and ESG services are preventing wealth advisers from getting new business from families they already work for, new research conducted among 1,022 adults between 28th and 30th January 2022 from behavioural finance experts Oxford Risk shows.

The research found nearly half (48%) of people whose families had relationships with wealth advisers did not seek support from the advisers after receiving £250,000-plus inheritances in the past five years. Around 8% did not get any advice. The loss of business adds up to more than 200,000 potential clients with average inheritances to invest of around £681,250, Oxford Risk’s study found.

The situation does not look like it will improve in the future – around 46% of people whose families have a relationship with a wealth adviser do not plan to seek their support when they receive an expected £250,000-plus inheritance in the next five years.

Oxford Risk’s study found that poor ESG services dissuaded 29% from using their family’s wealth adviser, and the same number were concerned the adviser did not understand what they wanted. Around a quarter (25%) said the adviser was too focused on older clients, while nearly one in five (17%) were put off by the adviser’s website or by them not offering a digital service.

Oxford Risk’s behavioural tools assess financial personality and preferences as well as changes in investors’ financial situations and, supplemented with other behavioural information and demographics, build a comprehensive profile. Oxford Risk’s financial personality tests can measure up to 18 distinct dimensions, of which six reflect preferences for ESG investing. It believes the best investment solution for each investor needs to be anchored on stable and accurate measures of risk tolerance. Behavioural profiling then provides an opportunity for investors to learn about their own attitudes, emotions, and biases, helping them prepare for the anxiety that is likely to arise. This should be used to help investors control their emotions, not define the suitable risk of the portfolio itself.

Oxford Risk is urging wealth advisers to make better use of technology to provide improved services to clients based around understanding their needs through detailed profiling.

Greg B Davies, PhD, Head of Behavioural Finance, Oxford Risk said:

“Wealth advisers clearly cannot win every client just because a family already has a business relationship, but it is striking that so many people go elsewhere for advice or do not get advice at all. Not offering an ESG service, or not keeping up to date with technology advances, are the major reasons why potential clients are opting to go elsewhere or not seek any advice at all, and advisers should consider addressing these issues.”