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The story is familiar, whilst the focus of this article is for Wealth Managers who deal with Ultra High Net Worth Individuals (UHNWIs), many leaders from a variety of industries that I meet say the same thing – “I really like your ideas and I can see how they add value…. but our business is built on relationships and we use our network to build our business, I don’t think they’d be open to social media or digital marketing. It’s just not the way we do it”.
It’s true, many industries such as Wealth Management are built on the ‘black books’ that Bankers and their associates have built over a lifetime. It is without a doubt that this approach has yielded results for the past 20+ years. However, change is afoot…
3 reasons to take digital disruption seriously
Whilst the ‘black book’ of connections has proven to be a successful strategy for the Baby Boom generation, there are some seismic changes that will affect the ongoing success of this approach.
In summary, these changes are:
- Massive transfer of wealth from baby boomer generation to their children which will upset the existing Advisor/Client relationship.
- New generation of investors have expectations that are shaped by new technologies.
- Big data, analytics and Robo-Advisors are changing the client engagement model.
Our research has identified 6 key findings of UNHWIs and their relationship with Wealth Managers. The top 3 are:
- Looking for best of both worlds
Clients are looking for a blend of digital information which they can access directly, and the ability to discuss their investment with a human advisor to cover sometimes conflicting investment decisions.
- Real-time information
Expectations have shifted. Younger investors do not look at their Advisor as a source of information. They want the information at their own fingertips so that they can make decisions and discuss accordingly with their peers and family members. This is akin to the shift in car purchasing behaviour experienced over the last decade. Historically a purchaser would make approx. 5 visits to a showroom before purchasing. They now typically make 1. What’s changed is that the customer has access to all the information and configuration options via the internet. Armed with their perfect specification they visit a dealership to get the best deal as opposed to discussing interior/exterior options with the salesperson on the forecourt. This shift in behaviour is being played out by younger investors and aligns with point 1 above.
- Ready to move
Our research identified some very interesting statistics –around 40% of Investors interviewed were actively looking for a new advisor. In an industry where relationships have historically dictated an Investors allegiance to an Advisor, the shift in the demographic make-up of Investors opens up a large opportunity for Wealth Managers.
How can you benefit from this?
In our opinion, there is a cultural hurdle for Wealth Managers to overcome before they can benefit from this opportunity:
- a realisation that the ‘black book’ alone will not drive the growth that firms seek; and
- a recalibration of the client/advisor relationship is required. Shifting from broker of information to provider of value through Insight to clients who are considering their investment options.
For those firms that are dynamic and willing to embrace new ways of engaging and retaining Investors, the opportunity has never been greater.
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