Delivering a top-notch client experience and using customers’ views to drive a wealth management business might sound like obvious approaches but the industry has a long way to go in getting the strategy right.

(To see another article from this conference, click here.)

Delivering a top-notch client experience and using customers’ views to drive a wealth management business might sound like obvious approaches but the industry has a long way to go in getting the strategy right, a conference has heard.

Fewer than half – 40 per cent – of wealth management firms recently surveyed by this publication (in a report due to be released shortly) have a dedicated client experience head or the equivalent today, delegates attending the recent WealthMatters conference in London heard. The conference was arranged by ClearView Financial Media, parent firm of this publication, and produced in association with headline sponsor Coutts.

(Other sponsors and partners are Equipos and S&P Capital IQ. Avaloq, WealthMonitor, City Credit Capital, Dion Global Solutions and TD Wealth were also partners in the event.)

“As you will all have probably noticed, over the last eighteen months or so there has been a marked proliferation of client experience appointments, whereby senior executives have either been given responsibility for client experience as their sole job, or it has been added to their existing remit. This trend was actually one of the drivers behind us deciding to research this topic since it’s a powerful indicator of just how seriously firms are taking client experience nowadays,” Wendy Spires, head of research at ClearView – and deputy group editor at this publication – said.

Speaking in a panel around the topic of enhancing the client experience,  Spires spoke about the report – which she has produced – including the finding that shows that 40 per cent of firms have a client experience head or equivalent. “There seem to be many reasons behind this, but a key one is that firms are increasingly realising that they have to compete on the level of service they deliver, as well as the expertise and capabilities they provide. In short, firms are increasingly thinking about the 'how' as well as the 'what' of delivering wealth management services,” she said.

(The 50-page report is based on a survey of 346 professionals all around the world, and 25 hours of interviews with 30 senior executives at leading wealth management firms, consultancies and other pertinent organisations.)

“Another crucial part of the `what clients want’ question is the level of customisation they really expect. If you look at wealth managers’ marketing literature probably without exception you will find phrases like bespoke, tailored, customised etc, however 41 per cent of front-line professionals said that clients don’t actually expect totally bespoke at all; instead they think that clients expect a broadly prescribed service package with extras 'bolted on' if needed,” Spires said.

Accumulated data

Peter Dingomal, business development manager at Avaloq, told the conference: “What wealth management organisations need to be able to do is use the centralised mass of data they have accumulated on their clients and their investments.  In this way they could really offer a tailored service and really demonstrate value.”

Referring to the importance of today’s digital channels, Dingomal continued: “Due to uncertainties in the world, even people who have entrusted money to discretionary wealth managers want to be able to look at their investments more regularly than was the case in the past.”

There was a strong technology flavour to the panel discussion. In addition to Dingomal’s comments, Alan Hamilton, chief executive of Equipos, spelled out what he said are the five most important forces creating change in how managers deal with the client experience, in ascending order of importance: personalisation; reporting; regulation, cost control, and client-centricity.

On personalisation, Hamilton said: ““Clients want relevant information that is unique to them, presented in a way that is easy to understand. Customisation helps retain clients, who are prioritising delivery of timely, relevant data above the provision of long and detailed commentary.” 

“Regulation forces transparency, which presents a reporting challenge for all wealth and asset managers. To accommodate the cost of compliance, wealth managers must find new and innovative ways to manage data and reporting processes. This will inevitably involve a degree of business change,” he continued. Switching to the issue of cost controls, he said that “we are seeing IT budgets being cut by 20 to 30 per cent in many instances”.

Hamilton went on to highlight how new hosting capabilities and the efficiencies in use of “cloud”-based computing systems are driving efficiencies and spoke of how firms that have embraced such technology have benefitted. “Hosted or cloud-based reporting solutions can be implemented in weeks not months. They drive massive cost savings and return on investment is very short. The cyclical nature of client reporting is ideally suited to hosted or cloud-based infrastructures, which offer rent-by-the-hour processing power,” he said.

On the “client-centricity” point, Hamilton said: “Most of your business operations are data or process-centric. Client reporting is inherently a client-centric function. It’s all about organising data into a client centric view.”

“ Client communications technology has advanced leaps and bounds in the last five years - Wealth managers with a client reporting solution more than five years old find that they lack the flexibility to deliver the kind of transparency required by the regulators and the personalisation/delivery channels/mobility now demanded by clients,” he said.

“The risk of automating client reporting or client communications has never been lower. Solutions in the marketplace are now functionally rich (i.e. the reality now matches the hype of a few years ago) and costs are realistic. Those who implemented in the last few years are leading the wealth management field and already have competitive advantage. There is greater competitive risk from delaying a decision to get started than beginning a project,” he added.

Client experience

James Edsberg, partner at consultancy Gulland Padfield, started his presentation by pointing out that by the term “client experience”, he means “everything other than the performance of a product”.

“At a time of low returns and difficult markets, the quality of client experience is the main differentiator between firms. But the penny has taken quite a while to drop. Very few firms have made a concerted effort to map and improve their client experience. Still fewer have engaged front, middle and back offices in the necessary transformation,” Edsberg said.

“If we show that firms have sincerely aligned their operations, offering and remuneration to a deeper understanding of clients, we will get more of the monkeys off our back,” he said, referring to the criticisms that have been directed at the financial services industry in recent years.

“In yesteryear, it [wealth management] was a product-focused approach,” he said.

Edsberg said some of the terms used in the industry can be a problem, such as “feedback”, which sounds mechanical and can be associated in people’s minds with criticism and form-filling. “Getting the language right around "feedback' sounds like a soft issue but in my experience, it is incredibly important if a business is to be truly engaged and positively-motivated to be client focused,” he said.

In too many cases, Edsberg said, relationship managers were in positions of having to cover for their firms, rather than the whole firm playing a role in communicating with clients.  If you ask someone from the back office, "what do you think clients want?", they should be able to answer and link what they do, to what clients want.  Too often the back office is trying to guess its role in being client focused.  

“It's time to challenge that very tired and over-used expression of the 'Trusted Advisor'.  Asserting that you should be trusted, marketing your firm as trustworthy isn’t the route to re-establishing trust. Clients will decide whether you can be trusted.  When you test the phrase with clients, they conclude that it’s a very self-regarding, antiquated phrase.  So for our wealth management clients, we recommend that they update their language and approach to reflect what clients actually want: Namely, a much more practical advisor for their needs, reliable, skilled, great at communication,” he said.

“Fairly or unfairly, this industry needs to rebuild confidence...but you do that by developing an insight into clients and delivering reliably what they need.  Saying 'Trust me' isn’t the way,” he said.

Stuart Newey, managing director, business improvement, Coutts, added: "One of our core values is to offer wealth management ideas and planning which are personal in delivery to what is an exceptional group of clients. What our clients expect is a highly tailored personal and special service."

"If you share with your client’s details of the changes that the firm is going through, rather than trying to hide them, then you will find that your clients will support you as you go through the difficult change process,” Newey said.