With industry reports highlighting a lack of loyalty among a chunk of wealth management clients, what can be done to improve the situation?

Fostering loyal clients – and encouraging their offspring to stick with their parents’ wealth advisor – is one of the most important challenges in the wealth management sector today. It is a global matter, even though different regions’ markets have their own characteristics (an approach for those used to Swiss private banking might not work in California, for example). A recent report by EY, the global consultancy (aka Ernst & Young) noted that a significant slice of clients have changed managers over the past three years, which also suggests that firms cannot count on customers staying loyal. An eye-catching finding from that report was that some 46 per cent of wealth management client respondents are not happy with their fees and are not confident that they are being charged fairly. UHNW clients are particularly unhappy, at 66 per cent, that report found. Another report, by Cerulli Associates, also flagged concerns about the lack of loyalty among the offspring of some wealth advisors' clients. (That report prompted industry figures to comment about the matter in this feature.)

There is therefore work to do. And at US-based wealth management group Argent Financial Group, its head of business development, Aaron “AJ” Jack, has views on what firms ought to do to retain client loyalty. This publication is pleased to share these ideas and invites readers to respond. The editors of this news service don’t necessarily share all views of guest contributors. Email tom.burroughes@wealthbriefing.com

With consumers being offered more choices than ever before, independent wealth management companies will need to strengthen client communications and better market their expertise to grow their businesses and improve client retention.

Accounting firm EY estimates that one third of wealth management clients will leave their current provider or move assets over the next three years due to increased competition among independent advisors, entrenched industry giants and fintech newcomers. In its 2019 Global Wealth Research Report, EY noted that despite the expected high rate of client turnover, a “clear opportunity exists to make financial advice more effective and impactful by better aligning what clients truly value.”

To survive and thrive in the future, independent wealth managers will have to create strong brands that clearly communicate a compelling value proposition that is superior to the competition. Here are six tips to build a business that will serve the best interests of your clients:

1, Take a holistic approach to improve client retention
To maximize wealth for their clients, advisors must take a holistic approach so that assets are managed in a meaningful, purpose-driven manner. Effective portfolio management won’t be enough.

Successful retention is about forging personal relationships with clients. It’s about having a deeper understanding of your client’s current and future needs, both personal and professional. Only then can you formulate a strategy and implement a plan that achieves their financial goals.

2, Be mindful of the next generation
The wealth management industry is undergoing a seismic shift, with an estimated $30 trillion due to be passed down from Baby Boomers to the next generation in the coming years. That’s why it’s vital for advisors to establish strong relationships with family members so that they are aware of the process and don’t feel like outsiders looking in. Stronger relationships with the next generation of family members will also increase the ability to serve them in the future as a trusted advisor.

3, Stay in regular communication with clients
Staying top of mind with clients through regular communication will be critical to improving retention. EY specifically cited knowing “what clients want and when” as an area that wealth managers need to address. Firms should employ coordinated communications strategies that are tailored to clients’ needs and provide relevant, timely information. An efficient communications process will help strengthen client relationships, especially when opportunities or problems arise.

4, Market your company’s expertise
Having a team of executives who are thought leaders is a powerful marketing and client retention tool. You want team members to be part of local, regional and national conversations about issues that affect the financial wellbeing of your clients. An integrated PR and marketing campaign that includes strategic media relations, regular blogging and social media engagement will bolster your firm’s unique value proposition and help you connect with current and future clients.

5, Maximize your client onboarding process
Wealth managers should not overlook the importance of onboarding clients. It’s when clients get their first glimpse into what it will be like working with your company. The onboarding process is a great opportunity to obtain more information about your clients so that you can better understand their immediate, short-term and long-term needs. Make it as easy as possible so that it sets the stage for a mutually beneficial relationship.

6, Survey your clients
What you don’t know can hurt you. Wealth managers must regularly check in with clients to see if they are meeting expectations - and client satisfaction surveys are a great place to start. Surveys can be straightforward - such as a single question that measures client satisfaction - or more comprehensive - such as asking clients to identify areas for improvement and how advisors can provide better service.  Surveys are also an important tool for sales, since satisfied clients are often one of your best referral sources for new business.

Client retention is one of the most important aspects of building a successful wealth management company. These steps will help you retain your existing clients, build your brand and position your company for future growth.