The wealth management sector is set for a significant shakeup, predicts PricewaterhouseCoopers.

Pressure from intense competition, increasing client demands and a squeeze on margins at a time of economic uncertainty will see some players in the wealth management industry re-evaluate their strategies, change the way they serve clients or face going out of business, according to a new study by PricewaterhouseCoopers and the Economist Intelligence Unit, “Wealth Management at a Crossroads: Serving Today’s Consumer”.

The survey revealed that wealth management clients are dissatisfied with the service they currently receive. They want skilled advice from the institutions to guide them through the economic downturn.

As part of the study, in-depth interviews took place with leading figures in the wealth management industry and a special online survey was conducted into mass-affluent attitudes towards wealth management.

The online survey revealed that customer loyalty is remarkably fragile, with 43% of respondents considering changing provider. Equally worrying, 31% choose to stay with their existing provider only because of lack of alternatives. The survey also exposed that although 17% of respondents currently have central relationships with their wealth management institution, a significant 41% wanted this type of contact.

As clients become both more demanding and less loyal, delivering excellent advice and service requires more emphasis on the quality of staff and the information they need to meet their clients needs. Knowledge of local tax regimes and complex products will also become more vital. A combination of better training and use of technology to explain complex information to clients is required to enable wealth management institutions to be more cost effective.

Robert Gould, global director wealth management at PricewaterhouseCoopers Consulting, said, “Clients want it all: a range of innovative products, local knowledge and personal service.”

Gould said that realistically only two groups have a chance of meeting these demands while keeping costs under control. According to Gould, the edge goes to large conglomerates with the ability to deliver products to international markets across a large client base, and niche players that can deliver high quality, personalized advice and service.

As the industry evolves towards these two models, PwC said that more consolidation is inevitable.