While there has perhaps never been a more opportune time for the best firms to differentiate themselves from the competition, the wealth management industry faces some extremely tough challenges ahead – that was the overwhelming sentiment expressed by the panel of wealth management luminaries at a recent London Breakfast Briefing, held by ClearView Financial Media in partnership with Advent Software.

The cataclysmic events of the past two years have left the industry reeling from what could be termed a perfect storm of widespread investment losses, scandals such as Bernard Madoff’s multi-billion dollar fraud and clampdowns from governments and regulators. But perhaps the most worrying issue facing wealth managers is the erosion of client trust, the panel agreed.

Richard Charnock, chief executive of Standard Life Wealth, highlighted the unpalatable but nevertheless salient fact that, according to some figures, over the past couple of years the average client has suffered investment losses of 25 per cent and been charged 1 per cent for the privilege. This, he noted, has understandably made clients question just what it is exactly that they are paying their wealth manager for.

But client trust can be regained, the panelists agreed, although they conceded that this may be a difficult task when it appears that many firms have prioritised product pushing over client-centric service and failed to treat high net worth individuals as just that: individuals.

Overly rigorous segmentation was highlighted by Jeremy Marshall, chief executive of UK private bank C Hoare & Co, as an area of particular concern. Clients are fed up, he said, with firms treating them like “commodities” and “seeing them like a bunch of oranges where the juice can be squeezed out.”

Efficiency is well and good, the panel agreed, but by shunting clients around and reassigning them to a different relationship manager in many cases are effectively destroying the very kind of relationship which makes clients “sticky.”

Unsurprisingly, considering the battering many firms have taken to their reputations over issues such as due diligence, reputational risk was another hot topic at the briefing among both the expert panel and the more than 100 senior executives in attendance.

Honesty and integrity emerged as key themes and one particularly interesting point made by David Scott, the founder of Vestra Wealth, was that in some cases it is important for wealth managers to turn business away. “I look at a potential client’s portfolio and ask myself what value-add we can provide. If we can’t, I tell them,” he said.

There was also a general feeling that firms would do well to be somewhat humbler in their attitudes; clients are now revolting against the industry’s “arrogance” towards them, said Scott.

Also on the expert panel was Mats Berggren, vice president of Sales, Advent Software EMEA, who agreed that wealth managers are increasingly realizing the need to focus on their core competencies and to deliver a client-centric service.

Through the intelligent use of new technology they can devote more time and resource to the value-add sides of their offering, he said. Increasing regulatory change, such as the UK regulator’s Retail Distribution Review is also pushing firms to re-evaluate their technology systems in order to be both compliant and drive growth, he added. He struck a positive note in outlining the improvements to operational efficiency that can accrue through this use of automation.

As might be expected given the regulatory clampdowns signalled by authorities all over the globe following the financial crisis, those in attendance were also keen to discuss how unfolding changes - like the resurgence of Glass-Steagall type rules - may affect the wealth management industry.

What the UK’s new government has in mind for future regulation of the financial services industry emerged as a top concern, with the consensus being that the wealth management sector lacks the ability to influence proposed regulatory change.

Marshall no doubt spoke for much of the industry when he compared the wealth management sector to "a cork on a big river, being swept along," and worries over lack of influence cropped up again during the briefing’s lively Q&A session.

What UK firms need, one attendee said, is a representative body with the membership coverage and stature to be able to lobby on behalf of the industry - a point with which most wealth managers will surely agree.