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NOV 1, 2022

Customer experience in wealth management: The battleground for growth?

Tariq Khan

Director Of Client Services at Objectway

Reading time: 2 min


Customer experience is king. The perception of its importance has changed dramatically over the past five years with a shift in focus from the back end and compliance to the front end in a quest to retain existing clients and attract new ones.

The struggle is real; research by Ernst & Young says that up to a third of clients will change their wealth manager over the next three years. Stats by Compeer are even more daunting. The research shows that up to 60% will consider leaving in the next 12 months if significant improvements to customer experience are not made firm thinks that up to 60% will leave.

Some of this is accounted for by natural churn due to inter-generational wealth transfer, but the majority of it is to do with customer experience. We think that this is the main battleground to retain and attract clients. Giving clients the feature-rich experience they want and deserve will influence whether they stay or go. Clients want a rich client portal that affords them all the features and functionalities they enjoy in their day-to-day lives in other areas like Netflix or Amazon. Personalisation is key. They want a portal that recognises them, knows what they like and do not like, where their interests lie, and pushes them research and notifications accordingly.

Being able to provide this is of fundamental importance to wealth managers. If they are not looking at it, then they certainly should be!

Delivering Customer Experience and the ability to scale

Most wealth managers are aiming to improve their hybrid operating model. This process has been accelerated significantly due to Covid. The realisation that face-to-face and remote are not mutually exclusive and that you can have an option-channel provision that will suit everyone on some level is now real and critically important.

Obviously, for some things, a client just wants to log on and check something out. For others, they need a face-to-face in-depth talk but theirs is all that lies in between. A client might want a quick zoom meeting or just to get a notification about an exciting snippet of news or research.
For this reason, is not just the portal it is having a mobile app that is fit and ready to go the portal that is not just static but dynamic, rich in functionality, and easy to use and attractively designed.

The key to unlocking this is segmenting not on wealth but on what clients want to do over which channel or model. Obviously, those with more wealth tend to have more complex affairs, but they still need to check an address, upload a file, or similar. You do not always need to use a sledgehammer to crack a nut.

This helps to improve the customer experience to attract new clients and retain existing ones. But it also drives efficiency and scale. If the wealth manager has a dynamic system, they are able to deal with a greater number of clients and thus do more with less, adding scale through efficiency.

And this is a principle that can be applied elsewhere, too, notably onboarding. The average time to onboard a client is eight weeks, which takes several stages. At best, it is an inefficient process, and at worst, it turns people away in much the same way as taking a week to turn around a relatively simple query about a portfolio. In addition, the intensity of the workflow, with it being manual, means that the scope for onboarding several people simultaneously is limited – this limits scope for scale.

Indeed, scale is the second part of the equation – it is no use being able to attract and retain clients if the cost to serve remains sky-high. There is a vast opportunity for operations to be improved and for the resulting scale that would be afforded, to add significantly to the bottom line. It is no surprise that lots of Private Equity Firms are interested in wealth management.

Although legacy architecture, not designed with APIs in mind, still abounds the technology to move on from manual excel sheets and data duplications does exist. So too, does the ability to procure and treat data at the back end so that it is fit for purpose at the front, delivering customer experience and the ability to scale.
Firms need to be sure that they have true front-to-back integration if they are to win the battle for customer experience and scalability.

We see an industry that will be undertaking some fairly significant technology investment 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 managers will buy themselves the ability to win on experience, provide scale, and the correlation between IT spend, and profitability will invert.