Wealth Management – A new style in client expectations

There are many internal factors that are changing wealth management – those familiar pressures like regulation, margin squeeze and investor confidence that we discussed in our last post, a new era of client reporting. There are external developments too, however, and these are busy bringing a whole new type of investor to the table.

The population of high net worth individuals (HNWIs) in Asia-Pacific currently totals around 3.3 million individuals. That makes it the largest market in the world, beating Europe into 2nd place for the first time in 2011, according to the World Wealth Report.

The combined wealth of the Asia-Pacific region had already overtaken Europe and India’s HNWI population chose 2011 to enter the roll call of the top 12 wealthy nations for the first time, too.

Why are these facts significant?

Well, because rapid change in the characteristics of HNWIs around the globe has driven an equally rapid change in the priorities of investors. Clients in BRIC countries are highly competent, tech savvy and internet enabled.

They are also much younger than ever before.

For example, in Asia-Pacific – excluding Japan – 41% of HNWIs are 45 years old or younger.

There is also a rising proportion of wealth controlled by females and all of these emerging demographics have different needs to long-standing HNW clients.

The World Wealth Report for 2011 warned that “firms could lose AUM if they fail to meet the needs of emerging HNWI demographics” and that seems like a valid fear given that the same report noted that, currently, advisors lose an estimated 49% of AUM during generational wealth transfer.

So, wealth managers face a situation in which the world’s wealth is shifting east, investors – the world over – are becoming used to real-time, web enabled communication and where those poised to inherit wealth will have radically different priorities to their parents.

Client reporting is no longer simply a regulatory tickbox exercise used to meet compliance guidelines and satisfy regulators.

Beautiful data, financial reports that use cutting edge technology to present complex information effectively and customisable interactive tools that help investors get closer to their wealth portfolios are no longer “nice to haves”.

Client reporting has become THE way to prove that your organisation is responding to the changing mood. It is your chance to raise the bar in transparency, prove that you welcome clients as individuals rather than policy numbers and provide client servicing that locks investors in to your brand.

Client acquisition is set to become harder and harder – not to mention significantly more expensive.

The effectiveness of traditional mass market media is waning. Consumers expect personalised, permission based communications and want to feel like equal partners in an ongoing dialogue rather than numbers that fill out a balance sheet.

As a result, acquisition will get harder, rather than easier… which makes the retention of AUM the no. 1 priority for many.

Retaining asset has a lot to do with performance – of course – but next on the list comes client servicing. We’ll be looking at what clients say influences their selection of a private bank in our next post but, suffice to say, if you are constantly wowing customers with interactive tools, valuable knowledge and outstanding content they will find it much harder to leave you.

The path to achieving that begins with creating absolutely outstanding client reports. Exceeding expectations for a brighter future.

See how Kurtosys can help you begin the journey today.