Three things the wealth management industry needs to know about its clients

The wealth management sector has traditionally thrived on being a high-touch industry and the stereotypical image of the private banker – a discrete, greying individual with gravitas, holding meetings in wood panelled rooms – probably still holds true in the minds of the population at large.

But how do the UK’s high net worth individuals (HNWI) attending those meetings actually feel about their wealth management relationships?

To answer this, Scorpio Partnership has released findings from its 2018 UK Client Experience (CX) Benchmark – surveying more than 900 HNWIs, who have wealth relationships with the UK’s 25 leading private banks and private client investment managers (PCIMs).

The study – the first and largest of its kind – measures key performance indicators (KPIs) such as Net Promoter Score (NPS) and Client Satisfaction (CSAT) and tracks four core pillars of the client journey (onboarding, financial planning, portfolio review and day-to-day management).

The results serve as a much-needed barometer to the UK wealth market, helping support C-suite decision-making by incorporating the voice of the client into business strategy.

Three key HNWI insights emerged that wealth managers should pay heed to:

1. HNWIs are ready to make referrals

‘Putting the customer at the heart of the service experience’ is a claim often repeated in mission statements and annual reports. In the last few years, many in the industry have started to measure and publicly report key CX metrics and forward-thinking firms are shaping their business development initiatives around these.

Scorpio’s results show HNWI respondents are broadly happy and express satisfaction, both with their primary wealth firm and their relationship manager. These metrics are important because higher client satisfaction typically translates into greater share of wallet (the average proportion of assets a client holds with their primary investment manage) and higher likelihood to refer others to the firm.

However, with share of wallet hovering around 61 per cent, wealth managers planning to grow by acquiring additional wallet share from existing clients will are likely to face an uphill battle. This is because 60 per cent tends to be the plateauing point after which clients become increasingly unlikely to transfer much more of their wealth to any single provider.

Instead, firms should consider leveraging their NPS scores and drive new asset acquisition by encouraging existing clients to refer the firm to their wider networks. While not something the wealth industry has in the past felt comfortable doing in a pro-active and structured manner, devising an intelligent approach by understanding which client segments are most likely to make new introductions can help successfully kickstart this initiative.  

2. Having a plan is not enough 

HNWIs have, on average, two interactions with their wealth manager a year. Of all the interactions across the four client journey stages, the most influential driver of satisfaction is the review meeting.

Those respondents who have undertaken a review or financial planning session with their adviser in the last 12 months are more satisfied with their firm than those who have not; they are also more likely to refer the firm to their wider network than those who have not experienced either of these interactions.

Interestingly, at these meetings clients are mostly likely to assess the performance of their adviser and the investments they hold against predetermined life goals (than market performance or any other benchmark). By understanding how clients would like to engage with the firm, the relationship manager and their finances, wealth managers can more effectively deliver the right experience and insight to clients. Setting out clearer goals and managing expectations can progress the relationship further.

3. Data and analytics are part of digital DNA

Having a compelling digital proposition is essential for every wealth manager today – especially when four in five HNWIs says they already access information on their investments via a website and 57 per cent regularly use an app.

It is therefore perhaps not surprising that many HNWIs feel the industry needs to learn from brands like Amazon who have created a seamless multi-channel experience – evolving ‘nice to have’ digital features into integral parts of daily life.

To improve differentiation, wealth managers need to think strategically about client segmentation and personalisation. For example, nearly half of respondents (47 per cent) say that if they were CEO for a day, they would prioritise innovation in digital to improve service and client experience. Innovation in digital services and especially connectivity is a point of clear differentiation to the mass affluent and those aged 35 to 54 – the industry’s soon-to-be target clients.

Caroline Burkart is director at wealth management think-tank Scorpio Partnership