Wealth managers could get more clients through digitalisation

Most wealth managers are missing out on huge opportunities by not offering clients with small assets a chance to tap into their expertise, according to new research.

Nucoro, a WealthTech company, made the argument after commissioning market research company Pollright to interview 53 wealth managers.

The research revealed 57% of the people polled had turned down potential clients because they had fallen below their service threshold, with wealth managers on average turning away 72 clients every year.

Moreover, 33% said the last 12 months had seen them turn away more potential clients than three years ago. In contrast, 2% were rejecting fewer potential clients and 49% said the number had remained the same.

The research also revealed that 20% of wealth managers allow clients with assets of less than £10,000 to invest. However, the majority would reject anyone with less than £50,000 to invest because it would otherwise not cover the wealth managers’ service costs. Although, 11% even demanded an investments of no less than £250,000.

“Wealth managers are facing growing costs through increased regulation and compliance issues, and margins are also coming under pressure as fees fall,” said Nikolai Hack, COO and UK managing director of Nucoro. “This means more wealth managers are choosing to only work with clients with larger investment portfolios and this is adding to a growing ‘advice gap’, where retail investors are finding it harder to secure the help they need to manage their investments.”

He did offer a solution, saying, “Greater digitisation will help wealth managers reduce their costs, improve their offerings and take on more clients.”

The news comes after Nucoro warned the other week that 50% of wealth managers will not be around in a decade’s time unless they innovate.

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