Many Canadians plan to switch finance firms

A survey shows more digital options have empowered consumers to shop around for options that meet their needs.

Wealth management companies may need to rethink the ways they position themselves in their customers’ lives, according to a new report that finds 44% of Canadians are likely to switch providers over the next three years.

The findings come from EY’s 2019 Global Wealth Management Report, which surveyed 2,000 of its wealth management clients in 26 countries.

“Canada’s wealth management sector isn’t immune to changes in consumer behaviour,” said David Hurd, EY Canada’s national wealth and asset management leader, who points out that Canadians are seeking financial advice from an average of four different sources, turning to small or niche companies for specific problems.

The report found that the increased number of digital options within wealth management are not just improving the customer experience, but are also making it easier for Canadians to shop around and research different providers, as well as move assets between them more easily. In particular, Canadians are switching based on being able to find more competitive pricing (33% of respondents), personalized solutions (30%), the ability to access their portfolio at any time (28%) and more personal advice and planning (27%).

Roughly half of Canadian consumers are interested in financial advice and planning but believe they don’t currently receive any – something that becomes apparent after experiencing a major life event, a big factor in a decision to switch. Among Canadian customers who have switched wealth management companies, 67% left a job in the previous three years, 64% inherited or received a major amount of money and 63% had a child.

Hurd said that despite the many ways in which Canadians can “shop around,” there remains an opportunity for firms to put themselves “at the centre of clients’ financial ecosystems” and be seen as a trusted source for advice during life events – something they can do proactively, given the amount of data available to them. “To do that [wealth managers] need access to timely and relevant information from internal and external sources,” he said. “With more data points, advisors and firms can provide personalized, custom-tailored services that appeal to clients at various life stages. That means asking questions and being responsive to their needs and wants every step of the way.”

On a global scale, the highest earners are slightly more likely to switch, with 39% of those making over $30 million and 34% of those making over $5 million expecting to switch over the next three years, compared to 27% of those making over $1 million and 31% making over $250,000. Generationally, millennials (36%) and Gen X (34%) are slightly more likely to switch in the next three years than boomers (26%).