Strategy
GUEST ARTICLE: Quick Tips On Proving Value Of Wealth Advice During Turbulent Times

There is no better time, arguably, for wealth management advice to prove its worth to clients - or potential clients - than when markets are turbulent, as they are now, this article argues.
A question that repeatedly comes up is how can the wealth
management industry show clients that it adds value and justify
its fees? In times of stress, when markets are volatile and there
are worries – as there are now about Greece, China or the Middle
East – this can perhaps be easier to show because there is
heightened need for advice. Wealth managers can point to
difficult markets as an opportunity to prove the value of what
they do and, hopefully, win clients’ respect and gain new
customers. In this article, Peter Aykens, financial services
research leader at best practice insight and technology company
CEB, examines how firms can prove their worth.
CEB advises more than 10,000 companies around issues of
talent, customers, and operations, including 90 per cent of the
Fortune 500, nearly 75 per cent of the Dow Jones Asian Titans,
and more than 85 per cent of the FTSE 100 constituency of
blue-chip companies.
The views expressed by the author aren’t necessarily shared by
the editors of this publication but we are pleased to be able to
share these ideas and hope readers will respond.
It is no secret that client and advisor relationships are rapidly
evolving as savvy customers constantly question whether they are
getting the best value, often diversifying the number of advisors
they use. At CEB we found that only 38 per cent of
high net worth clients used just one financial provider
in 2013, compared to 55 per cent in 2011. Meanwhile, the rise of
“robo advisors”, such as Nutmeg, means that many potential
clients are opting for “do-it-yourself” execution for at least a
portion of their portfolios, further eroding the mind and
wallet-share of clients’ primary advisors.
With these pressures facing the traditional wealth management
industry, many firms are searching hard for new ways to show
their value, boost their client relationships and, with it, their
assets under management.
Economic uncertainty - whether it’s the Greek debt crisis, a
looming EU referendum in the UK or the meltdown of China’s stock
market - can present a golden opportunity to deepen and
consolidate client relationships and prove the value of the
service they provide.
Naturally, these kinds of headlines come hand-in-hand with client
anxiety. Although a shaky bailout deal for Greece has now finally
been reached, images of Greece’s closed banks and empty ATMs have
no doubt stirred anxieties among wealth management clients across
Europe, many of whom are already feeling negative about their
providers, according to our biannual study of consumer financial
attitudes.
However, this uncertainty can open the door for wealth managers
to strengthen client relationships, through providing goal-driven
advice and tailoring programmes to guide clients through a period
of instability. CEB research shows that clients are 36 per cent
more likely to remain loyal to a provider that rates well in
tailoring and teaching - building trust, and enabling confident
decision-making - rather than just ongoing service and investment
performance.
So what are some of things that advisors need to focus
on?
Present the risks in a personalised way
While the Greek drama has had a knock-on effect to
European and, at times, global markets, advisors should keep
clients focused on their personal, long-term goals. While
short-term market volatility can be uncomfortable for clients,
knee-jerk changes to asset allocation can have significant and
damaging long-term consequences for returns. Advisors can best
avoid this outcome by keeping risks in perspective and looking
realistically at portfolio exposures to long-tail
events.
Focus on client goals, not market headlines
Client conversations should be centred around holistic advice
that tailors discussions to client goals and gives actionable
steps on how to achieve them. Firms need to take a step back and
reassure clients that despite dramatic headlines in the press,
they may not be impacted as seriously as they think. One wealth
firm we work with has accomplished this by drastically reducing
their client reports from dozens of pages to just five, to
reflect only the outcomes directly impacting client goals, as
opposed to every possible market scenario.
Allow clients to see the full picture
Many firms have enhanced their websites to give clients greater
access to all of their own finances, including detailed
scorecards that track progress using personalised success
metrics, rather than just comparisons to industry benchmarks.
Particularly during times of macroeconomic uncertainty, this
builds greater confidence among clients about their financial
goals and agreed upon long-term plans. One particularly
successful European private bank introduced this recently and has
since seen a significant uplift in client activity and overall
satisfaction.
Being able to offer this kind of tailored and actionable advice
for clients at times of uncertainty is what separates those
wealth management firms able to keep their clients’ attention
from those struggling to maintain mindshare and over-focusing on
asset growth.