Clients are selecting wealth managers based on their investment performance and dropping those viewed as having high levels of charges, research from Netwealth has shown.

Its study of 55-65 year olds with at least £500,000 in investible assets found that investment performance was the most influential factor when choosing a wealth manager, cited by 30 per cent of respondents.

This was closely followed by access to online tools (29.5 per cent), recommendation by family and friends (29 per cent), product ranges (25 per cent), and low fees (24 per cent).

For those seeking financial advice, the trust and reputation of the adviser or firm was the most influential factor, cited by 24 per cent of respondents, followed by convenience such as online meetings and flexible hours (23 per cent), and recommendations from family or friends (22 per cent).

When asked what would make them consider switching to a different provider, 42 per cent said it would be high levels of charges.

This was the most commonly cited factor, above poor investment returns (39 per cent), a change of relationship manager (38 per cent), and low quality or non-existent financial advice (33 per cent).

Respondents were prompted to describe their ideal investment manager, with the most popular option being ‘fully digital with low fees’ (31 per cent), followed by ‘hybrid’ with a digital interface and access to expert advisers (25 per cent), and 23 per cent citing a traditional and relationship-led wealth manager.

"Financial planning and investment services are rightly seen as essential tools for protecting and growing capital throughout a working lifetime,” said Netwealth CEO, Cahrlotte Ransom.

“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.

"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."

---