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Are wealth managers making their clients feel special?

6th February 2023 – In the past five years, the importance of customer experience in wealth and investment management has changed dramatically. This is going to be the main battleground to retain and attract clients. Read now the full Farvest article that resumes the results deriving from the latest Objectway Survey.

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In the past five years, the importance of customer experience in wealth and investment management has changed dramatically. This is going to be the main battleground to retain and attract clients. Organizations have progressively shifted their focus from the back-end engines of compliance to developing a compelling digital customer experience.

Anecdotal evidence supports this perception; for example, a report by Ernst & Young[1] states that as many as one third of clients will change their wealth manager over the next three years. Similarly, a study by McKinsey[2] shows that 70% of the client experience is based on how the client feels they are being treated—a metric largely dependent on quality of communication.

In a recent online survey conducted by Objectway, a Pan-European Wealth & Asset Management software and services company, the Wealth & Investment Managers outlined the latest customer experience trends.

Only 10% of respondents are highly confident in the effectiveness of their current digital experience offered to clients. The majority of wealth and investment firms surveyed (60%) feel that much work needs to be done to improve it.

But why is digital customer experience so important for organizations? Mainly because it promotes higher revenues and customer base growth (24%), it contributes to improve customer success metrics (24%) and reduces operational costs for customer service (20%).

On the other side of the coin, limited staff expertise, outdated technology and budget/time constraints are the top challenges in implementing effective digital customer experiences. Limited staff expertise can lead to inconsistent service. Outdated technology can impede the ability to efficiently serve customers or provide a seamless experience. Budget and time constraints might cut the resources necessary to improve customer experience. To address these challenges, businesses might need to invest in training, technology upgrades, and efficient processes to optimize use of their resources.

As such, half of organizations surveyed are planning to replace or update their platforms and apps for lead generation, engagement, insight generation and customer experience management. In this way, digitalisation not only enhances the customer experience but also boosts operational automation and efficiency too. The net result is that staff are able to spend less time doing administration and dedicate more time to proactively managing and nurturing relationships. This makes for better business as having a good customer experience makes for retention, greater share of wallet, and referrals.

Coming to the measurement of their improvements in digital customer experience, classic analytics are used by most firms: customer satisfaction (CSAT 32%), followed by net promoter score (NPS 16%), customer acquisition rate (16%) and customer lifetime value (CLV 15%). These tools help firms to identify areas where they are excelling and areas where they need to improve to meet customer needs and expectations. These insights can be used make data-driven decisions on how to improve the overall customer experience.

Furthermore, the survey data shows that companies are using a diverse set of tools to deliver their customer experiences. The most popular capabilities are CRM (43%), email marketing tools (17%), content management systems (CMS, 17%) and social media analytics (17%). Some of these tools are integrated into a wider digital experience platform, but others are standalone solutions. CRM is the core tool, but in the next years investment firms foresee the need for delivering a more sophisticated digital experience, with a digital experience platform and a customer experience management software. The need for a digital experience platform includes also an opti-channel dynamic portal with personalised interaction with customer.

Clearly, the industry will be undertaking some fairly significant technology investments as a means to get customer experience capability, and scale. We will start to see some fairly big projects as well as smaller tweaks to existing capabilities that are incremental and modular. In doing this, wealth and investment managers will buy themselves the ability to win on experience, provide scale, and the correlation between IT spend and profitability will invert. Indeed, a company’s ability to attract and retain clients depends on its ability to keep operating costs low. If the cost of serving clients remains high, the company will fail to make a profit. Large-scale improvements in operations can lead to significant increases in the company’s bottom line.

[1]Ernst & Young, Global Wealth Management Research Report, 2019

[2]McKinsey, TECE Survey, 2019