Bridging the digital gap
More than 50% of wealth managers aged under 35 say that offering enhanced access through digital channels will play a key role in client relationships, shows a CFA Institute Survey titled ‘The Value of Premium Wealth Management.’
For this study, CFA Institute, in conjunction with Scorpio Partnership, reached out to 1,370 private wealth advisers across the United States and Canada. Their survey also covered 4,000 wealthy individuals with an average wealth of $2 million to determine the next phase of the wealth profession’s development.
In today’s technology-rich environment, clients have more options for managing their money than ever before. Some, but by no means all, have already defaulted to a digital investment solution in the absence of a quality advisory relationship. But most clients still want to retain the existing model, on the condition that it undergoes a fundamental transformation.
Sixty-two percent of private clients now expect their wealth manager to integrate technologies into the experience to deliver a more complete solution, with this number rising to 71% of clients under the age of 35.
Besides technology, wealth managers cite transparency and competitiveness on fees and non-investment advice and recommendations (e.g., wealth transfer, tax optimization, mortgages, etc.) as very important factors in changing private client relationships in the next five years.
Biggest opportunities for advisers
Almost 80% of CFA Charter holders said generational wealth transfer is the biggest opportunity for advisers. The respondents cited offering differentiated value proposition and business succession planning/strategies vital for capitalizing the next growth opportunities. By contrast, other wealth practitioners tend to default to traditional tactics when charting the next phase of the industry’s development. Forty-seven percent of them continue to view market performance as a principal opportunity for the private wealth business.
What clients want
Clients want their advisers to deliver premium value beyond investment returns. These expectations are no longer simply set in the context of an advisory relationship. Clients are focusing on broader interactions with their wealth managers as being shaped by every transaction they make: whether purchasing a new phone, staying at a hotel, or taking a flight. The sum of these experiences creates the new normal in which wealth managers are now assessed.
The reasons younger clients consume and maintain wealth advisory relationships are altogether different from their older counterparts. As well as focusing on the performance of investments, younger clients also reference customized reporting, digital access, sustainable investment techniques, and demonstrating the value of the relationship in cash terms as important factors that drive them to continue working with an adviser.
Effective communication is the key
Transparency—in advisory processes and practices—can only take the profession so far. But being effective communicators with an open line of dialogue to customers and a commitment to professional standards can enable advisers to better demonstrate the importance, and value, of the advisory discipline.
Arguably, this level of communication can only be achieved if the proposition is fit for purpose, the client experience fosters a culture of engagement, and the industry is passionate and proud of the advisory profession.
Edited excerpts from ‘The Value of Premium Wealth Management’
