The world’s up-and-coming wealthy, customer focus is the number one factor in their ongoing relationship with their wealth manager, and, generally, wealth managers are meeting clients’ fundamental expectations, according to a study by SEI.
The research undertaken along with Scorpio Partnership, and NPG Wealth Management finds that 64% of high-net-worth individuals report their main money manager has a good knowledge of their core financial needs.
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Alfred West, Jr., chairman and CEO of SEI, said: "With this phase of research, we’ve examined what it takes to keep high-net-worth clients engaged and happy with their wealth managers. While we’ve found that investors are split as to why they remain with their firm, we’ve also found that this group is comprised of voracious financial learners. They want to regularly interact with their wealth managers, be it through ongoing communications, strong research, or engaging dialogue, and they expect wealth managers to do the same, by learning about their needs and tailoring services accordingly."
Satisfaction with their wealth managers is even more prevalent in the Americas, where nearly 8 in 10 high-net-worth investors believe their wealth manager understands their financial needs — whether in reference to wealth objectives (80%), total financial picture (78%), product and service preferences (79%), or attitude to risk (79%).
However, the research also found that satisfaction wanes as wealth grows. Individuals higher on the wealth curve are generally less satisfied with their primary wealth manager, with the wealthiest Futurewealthy (more than $4 million in net worth) having rated their money manager 16 marks lower than those with less than $500,000 in regard to providing customer-focused service.
Similarly, client segmentation plays a role in the Futurewealthy’s motivations for maintaining partnerships with their current wealth managers. Among the wealthiest Futurewealthy, no more than 13% report staying with their provider for any one motive, and top reasons were split between having the solutions and services to meet financial needs (13%); good portfolio performance (12%); and good advice, company reputation, and company strength/stability, each with 11%. By contrast, at the lower end of the wealth curve (less than $500,000 in net worth), portfolio performance is the predominate factor for continuing the relationship.
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By GlobalDataRyan Hicke, senior vice president, SEI Wealth Platform, said: "Through our Futurewealth research, it’s becoming increasingly clear that investors at various stages in their lifecycles and levels of wealth are looking for different types of relationships with their current wealth managers. While this knowledge provides wealth managers with an opportunity to broaden their client base through a diversified offering, it also creates a challenge. In order for wealth managers to increase the time spent learning about and interacting with clients, they must find a way to streamline transactions and add efficiencies to other areas of their business."
The report, which also examined how these relationship motivators translate to relationship longevity, found that the Futurewealthy have partnered with their main wealth manager for an average of 14 years and currently have 51% of their assets with their primary manager. Despite reporting they would not consolidate more than 53% of their total assets to a single provider, a pattern of larger consolidation over time emerged. The study found that by the age of 60, the proportion of wealth managed by the primary manager rose to 65%.
Kevin Crowe, head of Solutions, SEI Advisor Network, said: "Many factors play a role in why high-net-worth investors both choose an advisor and stay with their advisor. However, across the board, the advisors we work with have found that building a long-term relationship with this unique group of investors involves learning about who the Futurewealthy are and being able to tailor that perspective and advice accordingly as investors’ lives and financial goals evolve. No doubt, the most successful advisors realize that the relationship with their clients extends beyond a series of transactions and by adding value in multiple and meaningful ways."
