Time for wealth industry to re-evaluate client relationships

For most UK wealth managers, ultra-high net worth (UHNW) clients are their most valued, and valuable, relationships. However, studies repeatedly show that this is far from an easy cohort to service. Wealthy clients have complex needs and are often multi-banked, making it challenging to always meet their expectations.  

Aon’s Client Experience Syndicated Benchmark, conducted since 2019 for the UK wealth management industry, uncovers the specifics behind what makes the client experience stand out for wealthy clients. In 2020, the benchmark gathered more than 8,000 responses from private clients of banks and wealth managers, collectively representing assets under management in excess of £200bn ($275bn).

The data shows that 39 per cent of UHNW clients – defined as those with at least £3m in assets – are in the wealth consolidation phase, between the ages of 55 to 64. They are shifting their focus to capital preservation, stress-testing their financial positions and exploring a range of wealth transfer options to assist the next generation. 

Post-pandemic, these clients are also more likely to continue re-evaluating plans. Their interests are complex and wide-ranging, requiring careful consideration and trusted professional advice. 

Most wealthy clients have long-term relationships with their wealth firms. The findings show that more than half (54 per cent) have been with their wealth manager for 10 years or more. A third, however, started their relationship within the last five years, suggesting a healthy number are happy to switch or form new relationships. 

It is important to also note that Net Promoter Scores (which track willingness to recommend the firm to friends, family and associates) dip with increasing tenure – from 43 per cent among recent UHNW clients, to 36 per cent for those that have been with their main firm for 10 years or more. These findings highlight that having many long-lasting client relationships does not necessarily guarantee advocacy. 

Wealth mangers often tout diversification as the guiding principle of sound investment management and risk mitigation. Unsurprisingly, the wealthiest clients are therefore choosing to extend this lesson to their wealth relationships. The 2020 data shows UHNWs have multiple wealth contacts and 57 per cent spread their wealth across several firms.

When asked for feedback on their satisfaction with the overall experience, more than a third (35 per cent) of UHNW clients self-categorise as ‘neutral’ for recommending the firm to others in their personal and professional networks.

‘Neutrals’ represent potential precarious ground for wealth managers. With an improved client experience, neutral clients can be lifted into ‘promoters’ to help grow the business via referrals and net new assets. However, if a wealth manager’s response is mismanaged, clients could fall further into ‘detractor’ territory – which has implications beyond assets under management and can affect brand reputation and loyalty.

What makes these findings even more stark is that more than 11 per cent say they have not had an annual review or financial planning conversation with their wealth manager in the last 12 months. Of the 39 per cent who have had a financial planning conversation, only 54 per cent gave top marks – suggesting firms have further work to do to understand what is driving these figures. 

Most firms understand the importance of delivering a quality experience to their clients across their wealth management journey. This is particularly true in times of uncertainty, when clients are more likely to seek guidance and reassurance from their advisers.

Crucially for wealth managers, research confirms that satisfied clients hold more assets with their firm and are more likely to make referrals. And so, since the start of the crisis, firms who have delivered a first-class client experience have been able to leverage their ‘promoters’ and the strength of their relationships as a source of differentiation and revenue generation.

Faced with the knowledge that a sizeable portion of UHNW clients are passive about their relationships, however, wealth managers should take action. They should seek to diagnose the gaps in their client experience, prioritise desired improvements and track progress over time.

After a year like 2020, it is especially important for wealth managers to re-evaluate their most valued client relationships and explore new avenues of growth. This starts with transparency and capitalising on their strong foundations to ask for honest feedback.  

Jenny Kvaskova is manager and Caroline Burkart associate partner at Aon Wealth Management