When WealthBriefing posed the question in its weekly poll “What is the most effective way of private client acquisition?”, “word of mouth from existing customers” was voted the most effective tool by more than half of respondents (56 per cent).

When WealthBriefing posed the question in its weekly poll “What is the most effective way of private client acquisition?”, “word of mouth from existing customers” was voted the most effective tool by more than half of respondents (56 per cent). A “direct approach” (21 per cent) and “referrals from other advisors” (16 per cent) were in second and third place. Trailing in fourth place with just 4 per cent of the vote were “marketing initiatives”. We spoke to leading wealth industry experts to ask whether recommendations from existing clients are as important as the poll suggests and whether marketing initiatives are really so irrelevant. “It is unsurprising that word of mouth from existing clients topped the poll,” says Alison Petit, global marketing director, Rothschild Private Banking & Trust. “This is the most effective way to acquire clients as it has the dual reward of re-affirming the great job you are doing for your existing client as well as winning a new client. Perhaps marketing activities polled so poorly due to confusion over definition. The most successful marketing assets are not brochures or advertising but high-calibre and professional employees who believe in and reflect the brand’s values”. Ian Ewart, marketing director, Barclays Wealth agrees: “Recommendations from existing clients are the best ongoing test that clients are satisfied. If by marketing one means simply advertising, then this is not effective on its own as a client acquisition tool. However, with word of mouth alone, you couldn’t grow fast enough. Marketing is the framework to understanding clients and amplifies everything else. It also enhances and defends relationships and recognises and rewards existing clients, which may in turn lead to them introducing new clients to the business.” Mr Ewart also argues that whilst clients are often very happy to recommend their wealth manager, they do not always do so spontaneously: “Recommendations and marketing are not mutually exclusive. Client events, entertainment and sophisticated ‘member get member’ schemes might all elicit recommendations and provide exposure for existing and prospective clients.” Coutts achieves 30 per cent of its new business through recommendations from existing clients. Mark House head of business development from Coutts believes that the key to success is a focus on excellence: “You need to provide great service and deliver on what you say you will do in order to build trust. Clients then become advocates." He acknowledges that a direct approach is also an important part of the mix: "Although the wealth industry is expanding, there are not limitless numbers of wealthy individuals. We do sometimes identify potential clients to ask if they wish to join Coutts, most are flattered to be approached." Tony Conway, director of marketing and business development at Singer and Friedlander Investment Management says that whereas the large proportion of new client referrals coming from happy existing clients is a great accolade, an over-reliance this can be risky: “It means your client base is too narrow – and if one client leaves, they could all be at risk and leave. Brochureware in itself will not win you a client; the whole client experience must be right, ranging from good material, including clear valuations, to excellent personal communications with clients.” “There is a juxtaposition between the ‘hard copy’ required to support the business such as web site and brochures, and then the business development - type of marketing which includes wearing out the shoe leather meeting introducers. Whereas the big banks have their own distribution network, referrals from other advisers are crucial to a house like ours. Our marketing efforts include encouraging these leads from third-parties such as lawyers, accountants and high end IFAs. This approach leads to the client getting a ‘team’ of expert advisors, rather than the much vaunted holistic philosophy.” Ted Wilson, consultant for wealth management consultants Scorpio also believes it is dangerous to write off marketing as a client acquisition tool:“It forms the bedrock of a strategy to get the bank onto a private client’s radar screen—to ensure that it is considered when they make a decision about which private banks to talk to. Anecdotally, since Barclays Wealth began its marketing campaign, a number of other banks have noticed it in beauty contests which it would not have been in before.” However, he acknowledges that private banks are finding it increasingly difficult to differentiate themselves on product which means that service becomes the differentiating factor: “Service and intangibles have the ability to create the impression of a trusted advisor, which flows through word of mouth. Other people’s experiences are important when entering a close relationship such as that of an individual with a private bank. After all, you don’t usually find a husband or wife by advertising, but are more likely to meet them at a dinner party - through friends.” Mr House concurs that there is definitely a place for marketing in private client acquisition: "Marketing creates something that everything else hangs off and provides a consistency that helps to build an identity for the business so that potential clients understand what we do." Mr Ewart says that it is up to wealth managers to create a more fulsome engagement with prospective clients: “There is no silver bullet. This is a relationship business and clients need to work through the different phases of recognition, consideration, preference and loyalty through to evangelism. Advertising works at the front end, but it is integrated marketing and communications that help the growth of good, profitable relationships for both bank and client.” Mr House concludes that without excellence, any sort of advocacy will not be forthcoming: “Asking a client to recommend a friend when they are unhappy with the service they are receiving is a recipe for disaster."