Wealth managers are being selected primarily for investment performance but are most often abandoned over their fees, according to research from Netwealth.
The survey, which focused on investors aged 56 to 65 with at least £500,000 in investible assets, found that the single biggest factor influencing the choice of an investment or savings provider was investment performance, cited by 30% of respondents.
This was followed by access to online tools (29.5%) and recommendations from family or friends (29%).
However, when asked what would make them switch to a different provider, the largest proportion (42%) pointed to high levels of charges.
Fees were cited more often than poor investment returns (39%), a change of relationship manager (38%) or a lack of quality financial advice (33%).
The findings highlight an increasing sensitivity among affluent investors to the impact of charges on long-term outcomes.
Almost a third of respondents (31%) described their ideal wealth manager as “fully digital with low fees”, compared to 25% who preferred a hybrid digital-and-adviser model, and 23% who favoured a traditional, relationship-led service.
For those seeking financial planning advice, trust and reputation of the adviser or firm was the top factor (24%), followed by convenience such as flexible hours and online meetings (23%) and personal recommendations (22%).
Almost all respondents (93%) said they had taken financial advice, with retirement planning (30%), investment advice (29%) and estate planning (28%) identified as the main areas of focus.
The research also provided insights into the sources of wealth for this group.
Just under half (47%) said their wealth came primarily from salary, followed by 43% from business sales, 41% from inheritance and 36% from family gifts.
Charlotte Ransom, CEO of Netwealth, said: “Financial planning and investment services are rightly seen as essential tools for protecting and growing capital throughout a working lifetime.
“While investment performance remains a major attraction, there is growing awareness of the impact high fees can have on long-term, net-of-fee returns and, ultimately, on financial outcomes.”
She added: “Investors are increasingly asking whether the net returns on their investment pots truly justify the cost, especially in light of the consistent outperformance of strategies implementing lower cost passive funds compared to more expensive active managers in recent years.
“This has prompted a notable shift in client behaviour. Trust remains the foundation of any long-term wealth management relationship and personalised advice continues to play a central role.
“However, affluent individuals are becoming more discerning, seeking out firms that offer regulated, tailored advice alongside cost-effective, performance-aligned solutions that help them achieve their financial goals.”
