Clarity, client-centricity and good communication are key as wealth management firms look to the future and position themselves for growth – that was the conclusion of the expert panel convened for the latest Breakfast Briefing hosted by ClearView Financial Media in London earlier this week.

The SEI-sponsored event, entitled Evolving Wealth Management Models, saw luminaries from across the whole industry spectrum give their views on what shape successful businesses of the future will take, and outline how their own firms are tackling the vastly-altered landscape post-credit crisis.

Clarity

A prominent theme throughout the discussion was that of clarity, that those firms which will grow their market share are the ones which have clearly defined value propositions, and ones which make the role of the advisor clear. Clients’ dissatisfaction with their wealth managers during the financial crisis has been well documented and it is to be expected that going forwards they will be increasingly scrutinising what exactly it is they are getting in exchange for their wealth management fees.

Kicking off the debate, Ryan Hicke, managing director at SEI, noted that where many firms may be going wrong is that they have been unclear as to what they really want their value proposition to be. “They’re unsure as to where they really want to hang their hat”, he said, and must get “definitive clarity” on whether it is the relationship element or investment performance which forms the core of their offering. Linking this point to the ever-present theme of transparency he concluded “we need to make it clear whose proposition is trying to achieve what.”

This point was echoed by the independent wealth management consultant Bruce Weatherill who said that upwards of 35 different wealth management models can be identified and that firms aren’t “spending enough time deciding what they are.” In this way core models can become fragmented, he warned, adding that “it is phenomenally difficult to run a multi-model, multi-jurisdictional bank.”

Client-centricity

In addressing the various models within the industry, Weatherill drew a broad hierarchy of firms, with transaction-focused “product pushers” at the bottom and the relationship-driven houses at the top – those that he defines as having attained “trusted advisor status”. In these upper echelons of the industry, relationships are “stickier” and more profitable in the long term, but a corresponding degree of client-centricity is required in the service provision, the panellists agreed.

Matthew Spencer, director and head of intermediaries at Credit Suisse, summed up the issue of client-centricity by saying that “clients must be at the centre of our existence”. However, he emphasised that part of being client-centric is being flexible and that this may involve drawing on different wealth management models. “I welcome the fact that there are many different models to suit many different people,” he said, going on to emphasise the “one bank” philosophy espoused by his firm.

Communication

What came through strongly from the discussions is that being client-centric is not just about paying lip service to an ideal, but by tailoring the wealth management offering to the client, and not making too many assumptions as to what they really desire. “Excellent service is down to what the client wants,” said David Scott, chief executive of the London-based boutique Vestra Wealth, who gave the example that clients vary hugely in terms of the level of contact they want with their wealth manager: some are happy with an annual paper report while some want regular face-to-face meetings with their advisor.

The broad feeling expressed by the panel was that disappointing service was perhaps the greatest factor driving client attrition. “Clients can forgive a bit of performance, but not poor service,” said Charlotte Black, marketing director at Brewin Dolphin, who pointed out that administrative glitches - such as income not being paid on time - were sometimes the least forgivable errors in clients’ eyes.

The penalties for not meeting clients’ expectations in terms of client service were starkly laid out by the panel - not only do firms that disappoint lose that particular client’s business, but they also miss out on that which they might have had via referrals from them. In preventing the dissatisfaction that spurs clients to move wealth manager, the panelists agreed that good communication was absolutely central. Spencer stressed the need for two way communication with clients, going on to argue that client requirements  must be revisited frequently. Indeed, all the panelists were in favour of ongoing client “check-ups” which extend in-depth communication beyond the “on-boarding” stage of the client lifecycle.

Other issues discussed by the 60 senior wealth management professionals attending the event included the impact of the UK regulator’s Retail Distribution Review, the need for firms to drive down costs through efficient technology and see a real return on their investment, and how wealth managers might tap into the up-and-coming 20-35 year old technology-savvy market. The overwhelming note was however one of optimism and there was an acknowledgement that while the financial crisis had created problems, it had also created opportunities for those players willing and able to evolve. “For good wealth managers the market is absolutely wide open,” concluded Weatherill.