Well over half of U.S. clients either antagonistic or apathetic to WM cos.. Well over half of U.S. wealth-management clients -- 57% -- wouldn't recommend the firms they deal with and around 40% don't view these firms as their trusted advisors, according to a report by IBM's http://www- Institute for Business Value.

"Wealth-management firms have attempted to become more client-centric and respond to their clients' needs and expectations by placing more personnel on the front lines," says Douglas Butler, financial-markets leader at http://www- IBM Global Business Services. "This strategy has met with limited success with costs often outstripping gains resulting in minimal improvement of client satisfaction."

Broad market

The study, Building Client Advocacy: New Opportunities for Wealth Management Firms, is based on a survey of 1,311 U.S. wealth-management clients with investable assets of at least $500,000. IBM used something called the "Customer Focused Insight Quotient" to evaluate whether clients regarded themselves as advocate, antagonist or apathetic toward their firms.

Only 43% of those polled described themselves as advocates of their wealth-management providers, giving it a worse rating than property and casualty insurance providers (which had 51% of its clients as advocates), but a better score than the 24% the retail-banking business got. More than a third, 38%, are indifferent to their wealth-management firms and 19% rate themselves as out and out antagonists.

"We believe firms must move away from traditional client-satisfaction metrics and start focusing on client perceptions about the overall business relationship," says Butler. "For example, firms that can strategically use client attitudinal information to target and improve high-impact service interactions can strengthen their ability to improve client loyalty, wallet share and business performance."

That'll fix it

Advocates are more than twice as likely as antagonists to deposit 80% of their assets with a single firm, according to the IBM study. Advocates are also 60% less likely to exhibit sensitivity to fees, since they look more at other benefits of the relationship.

Apathetic clients listed key areas where their firms fared poorly. This includes understanding their needs, offering optimum advice, and effective teaming within the firm. Less than 40% of the apathetic clients felt that the firm fulfilled these requirements.

Interestingly enough, it seems that big-bank and wirehouse clients regard their relationship managers more favorably than those of other channels.

To resolve these issues, firms need to become more client-centric, to build compelling, unique value propositions, says IBM. Apathetic customers need to be converted to advocates by encouraging more dialogue. The payoff is supposed to be increased wallet share, better customer-staff interaction, and even reduced staff turnover.

Firms also need to build their capacity to analyze client data and act upon it, thinking beyond the conventional management reporting, according to IBM. Finally, operating models need to be refined to identify and repair service deficiencies, as well as to reach target segments better. -FWR

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