The cost of acquiring a HNW individual’s
business have rocketed in the past four years for UK wealth
management companies, a study from UK consultancy MDRC
suggests.
In 2012, MDRC calculated the average cost of
getting a new high net worth client reached £13,572 ($21,290), a
71% increase on 2008, when the cost was estimated at just
£7,930.
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Growing costs details
According to the report, the increase is mainly
due to operational inefficiencies and, specifically, to
relationship managers’ inability to be as effective as they were
four years ago in winning new clients.
The longer average time spent to obtain client
referrals accounted for 39% of the cost growth, while regulatory
changes contributed for the 31% and salary costs for 30%.
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By GlobalData
Buy-in rather than build?
The study underlined how, for many companies,
buying client details from wealth advisory businesses would be more
cost effective than carrying out all the new clients’ acquisition
process in-house.
The most expensive client acquisition reported
in 2012 was £22,301 while the most economical was £8,112, 40% less
than the average in-house acquisition cost.
