Financial service providers have been operating in a challenging environment for years. Banks, wealth managers and insurance companies are confronted with changing business models, increasing regulatory requirements and persistently low-interest rates. In addition, changing client needs and rapid technological progress play an important role.

In light of the introduction of MiFID II and FIDLEG, banks have concentrated in recent years on ensuring the regulatory conformity of their advisory processes. Frequently, projects that would have led to a professionalisation of the advisory process and an improvement of the client experience had to be postponed in favour of regulatory requirements.

Accordingly, the Wealth Management Study by Ernst & Young, published at the end of 2019, has made a wide range of financial service providers sit up and take notice. According to a client survey of around 2,500 HNWI and UHNWI clients worldwide, 35 per cent of clients intend to change their financial services provider in the next three years. For those financial service providers who take a proactive approach to the future and differentiate themselves from their competitors, the increasing willingness of clients to change offers a great opportunity.

But let us take a closer look: What do clients want today? What can the financial sector learn from other industries? To what extent does so-called “goal-based advice” or “goal-based investing” allow financial service providers to keep their finger on the pulse of their clients? In this article, we highlight eight specific aspects with which financial service providers can create value for their clients.

       1. Holistic advice

According to the above-mentioned study by Ernst & Young, holistic, goal-based advice is a decisive factor for a total of 42% of all clients surveyed in Switzerland, 24% of whom consider it to be of very high relevance. This form of advice – also known as holistic or integral advice – provides the client with comprehensive support in all financial matters that life brings with it.

The background is clear: On the one hand, people want to be considered individually with all their facets and wishes. On the other hand, meaningful, value-adding advice is only possible if the client’s entire situation is taken into account. Accordingly, financial service providers are expected to take into account not only the bankable assets booked with them but all bankable and non-bankable assets, liabilities as well as planned expenses and income. For example, if someone owns real estate, this has an impact on her or his ability to invest in shares. But also, life events such as starting a family are central to sound financial planning.

In reality, clients unfortunately often look in vain for comprehensive advice that combines all these aspects. Even more so, the merging of topics such as investment advice, financial planning and pension advice within a seamless advisory process is a great opportunity for financial service providers, but also an essential prerequisite for being able to survive in future competition.

       2. Individuality

The megatrend “individualisation” is in full swing. The demand for individual solutions is increasing across all industries, including the financial services sector. At the same time, new technologies, products and services make it easier to tailor products and services to the needs of individual clients. Last but not least, the trend towards individualisation goes hand in hand with an increasing differentiation of offers, at the end of which the personalised product represents target group size one – also known as the “Segment of One”.

Today, clients can tailor a new kitchen or a new car to their individual needs using an online configurator: Countless variants can be tried out and visualised in real-time. While the transformation towards completely individualised offers has already reached many sectors, financial service providers continue to offer their clients mostly standardised solutions – contrary to their needs. Take the example of the strategic asset allocation, which is usually limited to five variants.

       3. Emotionality

In a Viacom Media survey of 10,000 US Millennials, 71% of male participants said they would rather go to the dentist than listen to their bank advisor. Although this may be an extreme example, clients want more emotion and experience in financial advice. One reason why, for example, classic car sales advice still works well today is the experience factor that a test drive brings with it.

Financial advice may seem “dry and immaterial” at first glance. One way of integrating more emotions into the advice and creating an experience for the client is goal-based investing. Clients have wishes or dreams that are close to their hearts – whether it is buying a house for the young family or early retirement to spend more time with grandchildren. Thus, visualising how a wish can be realised given the client-specific financial situation contributes to experience-oriented advice. While on the emotional level one speaks of wishes or dreams, from an economic point of view these are financial goals which need to be taken into account when giving financial advice. In this way, the “beautiful” is combined with the “meaningful”.

Negative emotions of clients also play an important role. For example, the Worry Barometer 2019 of Credit Suisse and gfs.bern puts retirement provision in first place. Taking such concerns into account within a seamless combination of investment advice, pension advice and financial planning makes good technical sense and strengthens the relationship between client and advisor.

       4. Client-oriented language and presentation

Clients want simple and understandable language. While medical experts speak of “tachycardia” when the pulse is too high, in everyday life the term “racing heart” is used for this. Just as this technical term is incomprehensible to medical laymen, expressions like volatility or maximum drawdown are difficult to understand for the financial layman.

The above-mentioned goal-based advice makes this possible: The focus of the discussion is on the client-specific goals and hardly requires any further explanation by the advisor. This approach is more intuitive than assigning a standardised asset allocation on the basis of an abstract questionnaire, which only captures an incomplete picture of the individual client situation, as the regulatory focus is always in the foreground. In addition, in a goal-based advisory process, the failure to achieve the client-specific goals is considered the central risk. This is easier for clients to understand than an abstract statistical measure of dispersion such as volatility. The focus on concrete client goals makes the analysis tangible, meaningful and comprehensible.

In the area of tactical asset allocation, there are also opportunities to optimise communication with clients. For example, certain banks have moved towards focusing on theme-based investment ideas (e.g. Big Data) instead of talking about a tactical over- or underweight in a particular asset class and corresponding “tactical shifts”. This type of communication leads to greater understanding and creates – at least with meaningful topics – positive emotions for the clients.

        5. Focus on the essential

According to the above-mentioned study by Ernst & Young, 51% of clients surveyed in Switzerland would like to receive strategic investment advice. Determining the appropriate investment strategy/strategic asset allocation is the indispensable core of professional asset advice/asset management. Among other factors, this is because the investment strategy is the decisive element in the investment process, contributing around 90% to the development of a portfolio.

In goal-based investing, the focus is on determining the individually appropriate investment strategy for the client. Based on the client-specific financial goals as well as the complete asset and income situation, the optimal strategic asset allocation is determined, enabling the highest possible achievement of goals across various financial market scenarios. After all, the purpose of an investment strategy is to ensure that a portfolio can withstand negative market phases such as a financial crisis or the price slump that we saw at the beginning of the Covid19 crisis. Specific investment recommendations, e.g. which stocks to buy, follow in the next step, just as the upper floors of a house should be built on a solid foundation.

       6. Hybrid advice

The ongoing digitalisation plays an important role in many areas of life and work today – digital client experience, permanent online availability of services and networking of devices are omnipresent. Clients’ expectations of the “digital fitness” of banks are correspondingly high. After all, they are also transferring their experiences from other consumer areas to the financial sector. Why can’t I configure my banking services when I can put together a kitchen or a car digitally? Why don’t I have the same convenience with my e-banking as I have with Amazon?

Let’s take the example of private banking: Personal advice, traditional values, credibility and independence play an extremely important role in this segment. However, traditional offline clients who only use the physical channel are increasingly rare. This means that even traditional private banks cannot escape the environment of progressing digitalisation. Instead, they need to combine personal investment and pension advice with the latest technology to be ready for the future. When it comes to serving the next generation of clients, the combination of personal and digital advice – which, it should be noted, is not a contradiction in terms – will be essential. The trend goes towards a combination of both “channels” to optimally serve the so-called “hybrid clients”.

       7. Values and beliefs

Ecological, social and ethical aspects have recently gained in importance among the clients of financial service providers. Sustainable investing plays an increasingly important role, especially for wealthy and very wealthy private clients – for example in the form of “impact investing”, where funds are invested directly in projects relating to education, health or social issues with a measurable sustainable effect. On the one hand, clients are interested in their own ecological footprint, and on the other hand, they want to incorporate their specific ESG preferences into their investment allocation.

Although many financial service providers have an ESG offering, it is usually limited to the selection of sustainable assets. Other interesting aspects that would also allow differentiation from the competitors have so far been ignored. One example is the question of how climate change could affect the achievement of client-specific financial goals. Within the framework of goal-based advice, the connection between temperature increase, changed return expectations and personal goals can be visualised and corresponding strategic recommendations can be derived.

        8. Realistic advice

A client asks his bank advisor for his opinion on the future development of global stock markets. With a twinkle in his eye, the adviser says that if he knew this, he would hardly be working anymore. Open and honest advice also means giving realistic advice. As it is difficult, if not impossible, to predict financial markets in the short term, one should think in scenarios to include various possible developments when giving financial advice. A future-oriented advisory process that works with scenarios and appropriately reflects extreme events such as a financial market crisis gives clients a realistic picture and helps them protect their assets even in adverse market situations. The assumption of a non-normal distribution as the basis for the wealth simulation is essential in this context. Markowitz-based optimisations, unfortunately, do not reflect reality, even though many financial service providers still use them today.

Clients also want realistic and transparent advice on issues such as inflation, fees and taxes, which are known to have a substantial impact on wealth development. This is particularly true for a long investment horizon. For the sake of simplicity, let us ignore the tax issue and focus only on the effects of inflation and fees. Let us assume that the average annual return on a diversified investment portfolio is 5%. Assuming a value of CHF 100,000, this portfolio would have a value of CHF 703,999 after 40 years. However, if a 1% expense ratio and 1% inflation rate are taken into account, the value of the portfolio after 40 years would be only CHF 326,204. This is a kind of “compounding effect”, which is clearly reflected due to the long investment horizon.


There is a substantial gap between the needs of clients and the range of products and services offered by financial service providers. Clients want holistic, individual and realistic advice in a comprehensible language and presentation. The advice should include the determination of the appropriate investment strategy and be accessible through various channels. Last but not least, clients would like to have more emotions and experience besides making sure that their values and beliefs are taken into account.

While for instance payment transactions or the mortgage business have already undergone major changes (new players, breaking up the value chain), the transformation of investment and pension advice has just begun. Here, it is important to combine proven approaches – such as personal advice – with new solutions and to learn from industries that have already undergone the transformation towards a consistently client-oriented offering. Goal-based advice offers a way of reconciling all client needs.

Those financial service providers which proactively shape the future of wealth advisory will benefit from the increasing willingness of clients to change. We are happy to support you in all questions concerning the transformation of the advisory process.