OneLife - The DNA of European Investors - 10 steps to satisfying wealthy clients

A refreshing approach to life

NPG WEALTH MANAGEMENT

Source: The Futurewealth Report; Scorpio Partnership, NPG Wealth Management and SEI

High-net-worth individuals know they need support to make dreams a reality. They rely on wealth managers to perform the role of architects who understand their life and who can create the scaffolding for success, but just what is it that first prompts an investor to go in search of a new wealth manager?

From the very first moment, it is the life goals of investors that shape their relationships. Looking at the circumstances that lead them to a new provider, asset diversification is important (prompting the start of 23% of new relationships), but personal milestones play a key supporting role.

One in five wealthy Europeans embark on the search for a new wealth manager in connection with a property purchase, whilst almost as many (18%) are propelled into action as a result of inheritance.


Like highly charged particles careening through the ionosphere, HNW Europeans are constantly on the hunt for fresh partners for collaboration, for new wealth managers with whom to work. Their behaviour suggests that they are in search of a “perfect collision” that can enhance their lives and drive them forward in their wealth creation journey.

But when we asked wealthy investors about the mechanisms of finding their main wealth manager, we found that the process is not simply a case of random attraction. Instead, HNWI are inquisitive, investigative and exhaustive in their mission to discover a flawless friend.

Often, these worldly-wise wealth creators seek opinion from within their own solar system as a guide. 19% seek credence for their choice by talking to friends or family. A further 17% rely on their own investigative skills and use market research to locate a new wealth partner, whilst the remainder use a variety of sources to make their acquaintance: from a referral from a trusted advisor or relationship manager to the firm’s website or marketing materials.

To really impress the global go-getters who are the world’s wealthiest investors, money managers must present a culture that combines value and values. When European clients make a decision about which wealth manager to work with, reputation is the most important factor; 54% of clients said this was the single biggest influence on their decision.

Costs follow closely, with two-fifths singling out fee considerations, whilst 35% of wealthy Europeans say their opinion is most swayed by independent ratings and reviews. When it comes to assessing wealth managers, it seems HNWI are willing to trust the experience of their peers.

On average, investors consider just three firms before deciding who to commit to and, interestingly, it is the wealthiest clients who set the bar highest for their prospective partners. These UHNW individuals are searching for a provider who can impress right across the board and, in fact, there is just a 20% differential between the firm’s reputation and its social media activity, proving that success depends on an ability to leverage all available communication channels.

When it comes to wealth management, it is no secret that the world’s wealthiest investors are not monogamous. The industry may go to great lengths to court global money-makers but their minds remain open to affairs with other wealth partners.

On average, HNW European investors maintain relationships with three wealth managers. To an extent, this collection is a lifestyle choice. After all, the old adage about putting all your eggs in one basket can be no more pertinent than for those at the top of the wealth curve.

On average, HNW Europeans place just under half of their overall assets (46.1%) with their primary wealth manager. When asked what the maximum proportion of their wealth that they would consolidate with a single provider was, they raised that marginally to 46.7%.

And yet, it appears that many of them do actually want to add to the purse held by their money manager as time passes. The proportion of wealth managed by the primary provider increases with age and the length of the relationship.

As you would expect, HNW investors feel that the advisor is the linchpin of a great transaction experience. In fact, the top three factors that are most important to them when making a trade all relate to their human contact point.

The main desire of wealthy investors is to have an advisor who really understands their evolving lives and financial needs. This customer focus is the most critical part of their relationship experience.

HNW Europeans expect their wealth managers to continue to be truly client focused as their relationship evolves. To them, a great experience means working with a provider who has the ability to learn, unlearn and relearn as their lives and goals evolve.

But this is certainly not a one-sided tuition. In turn, the global elite are committed to high levels of communication and engagement on the subject of wealth. To enhance their long-term interaction, they crave information about money and how it should be managed.

Unsurprisingly, high-achieving wealthy individuals believe that quality rather than quantity is the essence of a desirable dialogue. Simply, becoming a ‘trusted advisor’ to HNWI is not about delivering an abundance of communications but rather, about what those communications consist of.

And yet, it’s good to talk. Clients who have lower satisfaction levels hear from their relationship managers less than those who give positive scores.

On average, wealthy investors speak to their relationship manager 9 times and other specialists 5 times a year and, broadly, wealthy investors believe that their wealth management firms are getting the fundamentals of the contact strategy right.

At a global level, HNWI believe that many more than 15 connections a year is excessive whilst five to eight are not quite achieving critical mass.

In general, high-net-worth individuals believe that their wealth management firms are on the right track to deliver key business standards. 80% of European HNWs rate the service they receive as “good”, “very good” or “excellent”.

Whilst satisfaction in Europe tends to lag behind that seen in the Americas, where 89% of clients are satisfied customers, the majority of wealthy Europeans are very happy. Roughly one in five (18%) gave their wealth manager an overall rating of “excellent”.

Change is afoot, however. Younger clients are more skeptical about wealth management service delivery. 27% of youthful Europeans believe that investment recommendations have not been in line with their financial risk tolerance.

So whilst the industry is moving in the right direction to implement the business standards that matter to clients, it may falter going forward. Younger investors are inherently more skeptical about the future of the industry and require the relationship manager and wealth management firm to be more aligned in their delivery of outcomes.

Wealthy clients are loyal customers willing to commit to long-term relationships, according to the Futurewealth HNW research project.

Investors in Europe have typically been customers of their main wealth management firm for just over 13 years and for the majority of that time, their financial needs have been looked after by the same key contact.

On average, European HNW respondents have been working with their primary relationship manager for an average of 8.1 years, slightly less than wealthy peers in Asia or the Americas who’ve typically worked with their wealth manager for 10.6 and 10.7 years respectively, but still an impressive length of time.

Clients who have been with their relationship manager for a great proportion of their time with a firm, tend to be more satisfied that those who have worked with multiple contact points. Those who rated their primary wealth management firm as ‘very good’ have been with their current relationship manager for four-fifths of their engagement with the brand. This compares to just three-fifths among those who rated their primary wealth management firm as ‘poor’.

Developing a trusted relationship requires time, commitment and a deeper understanding about the experiences of wealthy investors.

Overall, 89% of European HNWs said that they trusted their wealth management firm. 37% strongly agreed that they had trust in their primary wealth manager, a further 37% agreed and 15% agreed slightly, suggesting that, for the main part, wealth managers doing enough to inspire the confidence of their wealthiest clients.

We also asked HNW clients to think about the wealth personality of their main wealth manager and explain the key reasons why they have faith in the firm.

Their responses were split across four key elements, of which reputation emerged as the strongest driver. Reputation is the cornerstone of trust for a third of HNWI, whilst almost as many say that constantly delivering great service is what’s most important.

An outstanding customer experience might be the secret to keeping today’s HNW clients satisfied, but building the wealth management business of tomorrow depends on encouraging existing customers to recommend the firm within their network.

Net Promoter Score, or NPS, is typically used to measure positive client sentiment and our analysis finds that 23% of wealthy Europeans are “promoters” actively ready to become brand ambassadors and promote the services of their wealth manager.

Yet a comparison of NPS scores between HNW Europeans and their peers in the Americas reveals that European firms could be doing more. One in two HNWI in the Americas are classified as promoters, whilst a further third are neutral.

HNW Europeans are open to the concept of advocating their wealth manager but activity is very much dependent on wealth managers giving clients confidence in the relationship, opening dialogue about referrals and, finally, by reinforcing corporate values through every aspect of their engagement.


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OneLife - The DNA of European Investors - 10 steps to satisfying wealthy clients

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Transcript of OneLife - The DNA of European Investors - 10 steps to satisfying wealthy clients