The EY Global Wealth Research Report found that 40 per cent of wealth management clients were planning to switch providers in the next three years.
IFA’s and fintechs were set to be the big winners of the transition with independent advisors and independent firms to see a rise of 73 per cent and 93 per cent respectively over three years.
Fintechs looked set to see a 53 per cent increase, significantly higher than the global increase of 19 per cent despite the new entrants have lower levels of assets under management at present.
The percentage of clients using fintechs is on par with usage of long-established institutions, found EY, but that was expected to increase by 45 per cent globally in three years.
All segments of client wealth expected to switch with the largest growth being 41 per cent from high net wealth clients.
Currently EY found that no single fintech had acquired a large enough base to threaten the incumbents but clients were growing.
The fintech playbook to acquire clients with a niche offering and then broader bundles will bring fintechs closer to incumbents as their offerings mature.
Generation X seemed to be the driver of fintechs with 51 per cent anticipating using a fintech provider over three years and with 41 per cent of Millennials feeling the same.
The shift to providers globally is led by the emergence of new digital solutions and evolving definitions of what clients value but locally it is likely being driven further by the royal commission and regulatory scrutiny of the sector.
“There is the potential for a significant movement across the Australian wealth management landscape over the next few years, as clients look for providers who can better meet their evolving needs.
“The impact of the royal commission adds an additional layer of complexity to a sector that is already facing intensified competition among both incumbents and new market entrants,” said EY Oceania wealth and asset management leader Antoinette Elias.
Those most likely to switch were ultra-high net wealth investors with 39 per cent planning to switch over the next three years globally.
Millennials were also driving the switch drive with 36 per cent intending to switch providers over the next three years.
The EY report found that no sole provider was able to meet the varied needs of clients, with many of them having at least five types of providers.
As new entrants and technologies emerged wealth managers needed to evaluate their offerings and redefine how they provide financial advice, said the report.