Wealthy investors are seeking more feedback from sources including existing clients before they choose financial providers, including to research.

Wealthy investors are seeking more feedback from sources including existing clients before they choose financial providers, according to research from Scorpio Partnership.

In its Futurewealth Report 2014, Scorpio, the consultants, drew insight from 3,025 high net worth and ultra-high net worth end-investors. The report found that the significance of “independent opinion” – including client referrals, ratings and reviews – has risen by 15 per cent in the last two years, more than any other customer experience factor. This is the largest change in factors influencing new business.

“Our research shows that investors are focusing much more on not just anecdotal feedback but more quantitative assessments based on views of clients and those familiar with the business in question. Ratings are a sophisticated and unchartered territory for global wealth management. In our opinion, based on the unique large scale HNW and UHNW insight we have been collecting for this research programme, the industry is now on the cusp of launching the equivalent of a Wealth Management Trip Advisor. Its arrival will revolutionise the way in which individuals select firms,” Sebastian Dovey, managing partner at Scorpio Partnership, said.

“The key will be building a major data set of comparable insight, which is what we are exploring now. This is a dynamic new frontier,” added Dovey.

The report was issued by Scorpio in conjunction with SEI, the US investment and consultancy firm, and NPG Wealth Management.

The paper notes that HNW clients on average have referred seven of their peers to the firm during the lifetime of their relationship. Increasingly wealthy investors are going to be much more influenced by the views of other clients – both directly and indirectly – when making the decision to select providers.

Regional differences emerge. In Asia, the average referral rate is approximately 15 per cent above the global average, while in the US the referral rate is approximately 30 per cent below the global average. The quantity of referrals appears clearly correlated to the frequency of the requests: 43 per cent of Asian HNW clients are asked for referrals at least once a quarter, compared to 10 per cent of those in the Americas.

Asking, receiving

While the industry assumption that referrals are the bedrock of asset growth, the results show that currently just half (50 per cent) of the global wealthy said they would actively refer their wealth manager. The same investors stress that they are not unhappy with their providers – indeed satisfaction levels are very strong – but they are simply not certain that they can confidently promote their provider to other associates.

Wealth managers are more fervent in their requests to the younger generation. On average, 42 per cent of the under 40s are asked every quarter for referrals, compared to just 8 per cent of the over 60s. The youngest "futurewealthy" have referred on average nine of their friends or colleagues to their main wealth manager compared to those over 60, who have referred just four, the report said.

In the Americas, stability is cited as a key attribute for recommendation by 58 per cent of those sampled in the report. This is closely followed by good performance, personal service and integrity. Asia Pacific’s wealthy give credence to a broader range of factors from stability and performance to innovation, value and a firm’s global network.

The average level of wealth among these individuals was $2.9 million. Geographically, some 47 per cent of the sample group live in Asia Pacific, 34 per cent live in the Americas, 14 per cent live in Europe and 5 per cent live in other countries around the world.