A new report has revealed that investment managers are winning the battle for wallet share and satisfying their clients more than other types of institution.

A new Ledbury Research report has revealed that it is investment managers which now enjoy the highest share of wallet in the wealth management industry, after two years of steady gains.

The firm’s Competitor Landscape 2012 report found that 39 per cent of the high net worth clients of investment managers place at least three-quarters of their investable wealth with them. In second and third place were non-British universal banks and traditional private banks, at 28 and 27 per cent respectively.

Over the past three years the proportion of clients placing at least three-quarters of their investable wealth with investment managers has been steadily growing. In 2010 it stood at 23 per cent, rising to 29 per cent in 2011 and reaching 39 per cent this year.

Meanwhile, over the past year, non-British universal banks have suffered a serious reversal of fortunes. In 2011 46 per cent of the clients of such firms placed at least three-quarters of their investable wealth with them – a stark contrast to this year’s figure of 28 per cent.

Ledbury’s findings are also in contrast to those of a recent WealthBriefing poll in which industry professionals were asked which type of institution they think is winning the battle for wallet share. Here, two-thirds of respondents chose traditional private banks, with investment managers trailing far behind.

In looking at the reasons behind investment managers’ increasing wallet share, Ledbury identified a “near-straight line” relationship between client satisfaction and wallet share – a finding which is unsurprising but underlines why keeping existing clients happy should be a top priority in order to grow businesses organically.

Key strengths

Ledbury notes that performances on all but one of the drivers of satisfaction are above average for investment managers. Among the key strengths demonstrated by these firms were clients feeling that their provider has their best interests at heart; clients believing that they are being offered a range of products which meets their needs; and clients holding the service they receive as being high quality.

The study also suggested that non-British universal banks need to take a long hard look at themselves if they are to prevent an exodus of clients. Some 38 per cent of the clients of these institutions say they are considering reducing their level of assets or switching providers – the highest proportion found in the study. The clients of non-British universal banks are clearly unhappy with their main contacts: this year just 43 per cent of clients rated them at least 8 out of 10, while in 2011 the figure was 62 per cent.

Losing clients will be particularly costly for non-British universal banks, Ledbury warns, since although these firms’ clients tend to be younger and at an earlier life-stage than the clients of competitors, they have a higher than average wealth level within the HNW population.

“Aspects of the overall non-British universal bank offering which require improvement relate to the nature and quality of the client experience. The most important attribute, from the perspective of these clients is the quality of service, followed by being made to feel that they are being treated as an individual, and valued as a client. Improving performance on these attributes would have the greatest impact on their overall provider satisfaction scores,” said Ledbury analyst Jennifer Ross. “A competitor which can demonstrate superior performance in these areas, whilst also proving easy to do business with, will be in a good position to take business away from this segment.”