Clients who have seen their net worths shrink during the global financial crisis are demanding more from wealth managers and are trusting them less.

That is one of the findings of a report by accountancy firm PricewaterhouseCoopers, entitled "A New Era: Redefining the Way to Deliver Trusted Advice".

The report draws on insight from a survey of nearly 240 private banks and wealth managers from around the world, including Bermuda, and finds that increased transparency is a key demand from clients.

It finds that clients have raised the bar and are now demanding more from their wealth managers, including peace of mind.

"More than half (53 percent) of high net worth clients surveyed say that their primary source of financial advice is now their own research capabilities and independent knowledge, an indication of their scepticism about the quality of the advice they actually have been getting," PWC said in a press release on the report.

Andrew Brook, partner and Asset Management Practice leader of PWC Bermuda, said: "Local and internationally focused private banking firms and wealth management companies based in Bermuda are facing the same challenges as global organisations.

"With increasing regulation and demand for accountability, transparency has become the established norm for wealth management.

"How clients are kept informed about the performance of their assets, as well as the integrity, financial health and processing status from their wealth managers, underlying service providers and counterparties, will be what differentiates financial organisations in these demanding times."

Highlights of the report include:

• Boutiques and smaller client ratios will play a significant role.

• Client service and brand differentiation now trumps history and brand awareness.

• The era of absolute banking secrecy is over. Through international pressure for increased transparency, the era of absolute banking secrecy has evolved into a new world of "compliant confidentiality".

• The private banking and wealth management world will continue to become more transparent and more regulated in the years ahead. While onshore centres will manage more private wealth than they do today, International Private Banking Centres (IPBCs), like Bermuda, that choose to focus their offerings and complement onshore services will continue to play an important role.

• A fast-changing international regulatory framework will lead to a new generation of treaties between IPBCs and large economies - an example is Bermuda's recent signing of a significant number of TIEAs (Tax Information Exchange Agreements). Wealth managers will not want to impact their reputations by operating in "non-transparent" or "non-cooperative" jurisdictions.

• Clients demand transparency. High net worth clients now want much more transparent product offerings, product suitability, robust due diligence and real-time customised reporting with proactive risk/reward analysis versus a point-in-time snapshot of their wealth and holdings.

• Further consolidation and a period of inorganic growth appear inevitable. Industry consolidation appears inevitable. Some 88 percent of wealth managers surveyed expect further consolidation in the sector in the next two years, with 34 percent expecting substantial consolidation.

• A ruthless drive for operational efficiency and cost reduction. While enabling growth is the top priority for chief operating officers (COOs), short-term cost-cutting is their second-highest priority.

A copy of the full report is available online at www.pwc.com/wealth.