A look at why - even though high net worth investor returns are at a high - confidence in financial services providers is at a low.

Bob Leaper of DST Global Solutions looks at why - even though high net worth investor returns are at a high - confidence in financial services providers is at a low.

Despite the solid year in performance that
the US stock market saw throughout the course of 2013 and the resulting
increase in wealth that many high net worth and ultra high net worth individuals have accumulated, sentiment toward
financial service providers (those making actual investment decisions) actually
declined from Q1 – Q3 2013.

In a survey of more than 700 HNW
individuals, CEB TowerGroup research uncovered that HNW and UHNW clients remain
uneasy about the safety of their investments and complexity of fee
structures.  In fact, 35 per cent
have little or no confidence that their financial provider ensures the
reliability and consistency of their transactions; 33 per cent do not feel
confident that their financial provider can keep their money safe; and 45
per cent lack confidence that their financial provider offers clear and simple
policies and fees.

This should be a wakeup call to private
banks, wealth managers and their advisory arms, whose business models are
dependent upon maintaining and growing client relationships.  

One of the main takeaways from the survey
is that service providers need to restore clients’ confidence in how they are
protecting and growing investors' wealth. Not only do firms need to ensure they
are doing this, but in a market ripe with competition, they also must prove
they are the best provider out there.

Restoring trust and building confidence
in their service comes down to being more transparent about investment returns
and customizing client reporting options based on the needs of each individual client.

What is the deal?

The reason why many private banks have not
solved this transparency challenge is because coming up with the "macro view" and articulating it to clients monthly (or more frequently) is a big research
and production challenge rooted in operational infrastructure.

In a recent
survey that DST Global Solutions and Aite Group produced, 29 per cent of asset
and wealth managers handle key client investment data in systems that are more
than 10 years old. When new technology is introduced, it is often a quick fix
to a present problem and may not be operable with other systems. While the
immediate problem may be solved, greater problems arise as critical client data
becomes trapped in disparate systems scattered across the enterprise.

To piece the data together into a
meaningful presentation for clients, many wealth management firms and private
banks string a myriad of manual processes and workarounds together.  Such workarounds are inevitably slow,
fraught with risk and operational overhead and miss key components of
data, making the end goal of
achieving transparency a great challenge.

Private banks looking to reinvigorate the
trust and confidence of HNW and UHNW individuals need to consider which tools
can help them achieve greater transparency. 

Technology today can help ensure investment decisions are
backed up by data and integrate information into existing web and mobile
properties in alignment with the firm's IT strategy, ensuring critical
investment information is easily digestible. 

By uniting and aggregating client holding data in one
central location, firms can take a more holistic view of the most up-to-date
information when pulling insights for investment decisions and client
reporting.

Once this data is centralized, firms can run performance and
attribution analytics and easily slice and dice the information, presenting it
to clients in the format they desire. 
Of course this is only one step to overcoming investors' post-financial
crisis confidence levels.  Positive
trends in the market and strong financial returns are also key.