FS providers need to embrace client behaviour change: not run away from it

t’s a long-standing industry trait: Wealth Management firms are reluctant to encourage their RMs to develop their own personal profiles.

Conventional wisdom says that by doing so, you make it easier for rivals to poach your highest fliers – people in whom you’ve made a significant investment. True, RM churn does cause problems for businesses who want to ensure a consistent approach to HNW clients… which explains the prevailing reluctance to promote or even name teams in the public domain.

But that’s not the case elsewhere. Senior legal partners actively promote their personal profiles and specialisms. If they’re renowned in their field, they say so. Client relationships are managed in tandem with speaker engagements, article writing and regular blogs, as well as through social channels like LinkedIn, company Twitter feeds and so on.

Admittedly, investment RMs can’t claim to be the best performer in their field. But the marketing landscape has changed irrevocably and firms need to respond.

According to research by LinkedIn and Greenwich Associates, HNW Millennials routinely “check out” potential Relationship Managers and other executives before entering a financial relationship. How? Via social channels like LinkedIn and – if available – industry blogs and articles.

One-third of HNW Millennials use the social media profiles of potential wealth advisors as part of their evaluation process, compared to only 10% of HNWIs of all other age groups.
— The CEO guide to customer experience - Executive Briefing, McKinsey Quarterly, 2016

A note on the notorious ‘M’ word… In finance more than any other industry, the word “Millennials” causes a mass rolling of eyes. This frustration is perhaps forgivable given the bloated body of research that suggests Millennials are the only game in town (they’re not).

In my own experience, it’s more valuable to think of Millennials as representing a broader set of attitudes, rather than a rigid age category.

One thing is clear: whether your audience is 25 or over 45, more and more prospects now expect to make their own judgements on who they want managing their wealth – whether on a discretionary or advisory basis.

Complexity is part of the package

The myriad ways in which clients want to interact with their Wealth Managers creates a minefield of contradictions and unknowns… and that’s before you start considering which approach, technology or platform is best suited to addressing the need.

But this complexity is also the reality. The solution lies in embracing it.

In 2015, research by NPG Wealth Management, SEI and Scorpio Partnership revealed that “11 interactions a year is the ‘sweet-spot’ level of contact with Relationship Managers at wealth management firms” (1)

The same research went on to suggest that when interaction levels dip below this level, clients are more likely to give a negative review of their experience.

More recently however, EY has challenged some of the pre-conceived ideas that we have about client expectations:

Clients place significantly higher emphasis on transparency in fees and portfolio performance while somewhat downplaying the role of advisor interaction. In contrast, wealth management firms emphasize the role of advisor interactions, while overlooking the impact of transparency.
— LinkedIn / Greenway Associates HNWI & Wealth Management Report, 2016

This suggests that institutions may be over-emphasising the role of relationship managers. The current perception of an RM’s function maybe something of an industry habit that fails to reflect existing – let alone future – client needs.

In many ways that’s understandable. Having invested in so much talent, banks and wealth managers want to push their people to the fore. But of course, this makes their reluctance to develop each person’s multi-channel profile harder to justify. More contradictions…

Another vital aside: It would be remiss of me to ignore the complex regulatory and compliance issues at work here, particularly around ‘advice’. That said, more and more services and platforms now address these precise issues, for example by enabling RMs and Advisors to make effective use of social networks while working within the required regulatory frameworks.

So, why is it all so difficult?

Let’s be fair. It’s easy for agency bloggers to criticise firms from afar. While the whole scenario may seem crazily flawed and easy to fix from our side of the fence, it’s never that simple.

However, an outside perspective can help businesses move away from a one-size-fits-all mentality, and begin to appreciate the dozens of touchpoints and ways in which clients can engage.

Our collective failure is to continue seeing everyone as the same.

No less worrying is the current tendency (mentioned above) to fall into the “Millennials First” or (worse) “Millennials Only” trap. It may be a perverse blessing that most businesses are ill equipped to actually do so.

We know, from our own daily experience as consumers, that we want to interact in different ways with all sorts of providers. So why do we ignore that simple fact when we get to work?

And of course, it’s hard for larger institutions to be nimble. Procurement processes and securing commitment to capital expenditure can be long and drawn-out, consigning businesses to complex and cumbersome legacy systems that are hard to upgrade. The digital world has developed at lightning speed, making it hard to deploy and maintain the best-in-class systems your customers and prospects may be demanding.

But therein, perhaps, lies the rub: which customers or prospects do we cater for?

What practical steps can we actually take?

There’s plenty more contradictory evidence about who wants what from their wealth managers, from the wealthiest, the most engaged, the least engaged, oldest, youngest… to whichever segment is thought to hold the key to a successful future.

The probable answer, of course, is that they all contribute.

And that’s the point.

Behavioural change really means behavioural diversification.

Trends will come and go as technology develops, but in my view the chances of one audience group coming to dominate wealth management are pretty slim. And frankly, believing otherwise is a neat reason to ignore the tricky questions you need to address within your business.

The real challenge is to understand all the touch-points in all your customers’ journey – be they real, digital, or virtual – and meet them in the best way you can with the means you have at your disposal.

But returning to my first point: I do believe that whether the industry likes it or not, all arguments against raising the profile of individual RMs are now defunct. If you don’t, your brand won’t even get on the consideration long-list.

It’s worth exploring the range of fully compliant social and content management programs now available, which enable RMs to grow their client base and, more importantly, raise their own profiles. This can include media training and expert assistance with live streaming platforms like Facebook Live for example.

Primarily, you should foster increased understanding, focusing on current and potential client touch-points, how behaviours are diversifying and the practical changes that need to be addressed.

Or, as some might say: embrace contradiction.


(1) Plan Adviser: More Provider Relationships for HNW Investors, citing Cerulli, High-Net-Worth and Ultra-High-Net-Worth Markets, 2012