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Wealth manager seeking client retention solutions
Analyzing communications: The next step in client retention for wealth managers

With a persistent low interest rate environment, prohibitive costs and complexities around compliance, and fast-evolving client needs, to say that wealth managers globally are feeling the pressure to remain relevant and profitable is an understatement.

The wealth management landscape is more competitive than ever before.  Firms are trying to gain the attention of customers across all wealth levels, from the mass affluent to high net worth (HNW) and ultra-high-net-worth individuals, keep them engaged over the years, and successfully access a greater share of their wallets. Add to that the nifty new digitally-led players – more popularly known as robo-advisors – that wealth managers must now contend with. Incumbents are, no doubt, feeling the push to be more agile, flexible and efficient, yet they are also expected to maintain a high-touch service and bespoke offering.

New competitors are also cropping up from the most unlikely of industries – be it an Amazon looking to partner with J.P. Morgan to potentially offer current accounts to the idea of Google one day managing money. What is it that these firms do so well that make them relevant and intrinsic to any individual’s everyday life? Yes, that is right, they make excellent use of customer data to provide a unique client experience.

The language of complaints holds key indicators about the strength of any client relationship. Interactions with clients are the window into their priorities and provide early red flags.

The likes of Google and Amazon have the basic customer information around gender, age, contact information at hand, but what they also have access to is patterns of behavior – around shopping, traveling, news of interest, and most importantly, the insights gained from customer search and transactional histories. They use this data to curate relevant content for each client. That quality of service and satisfaction is what makes most customers smile widely at the thought of a Google Bank or Amazon Bank. While the average consumer is getting used personalized financial services, the wealthier client takes this for granted and so expects even more. Wealth managers and advisors must find new ways to compete.

Winning new clients is tough, keeping them is tougher

The reality is, in an environment where competition and regulations are pushing wealth managers to be constantly appealing and transparent, it is easy for wealthy clients to take their money elsewhere if they are not satisfied. This makes it imperative that wealth managers identify the true reasons behind any client dissatisfaction – ideally much before the client attrition takes place. This sounds simple but, in a majority of cases, we notice that wealth managers are looking for answers in the wrong places.

Beyond evaluating the obvious – transaction history, portfolio performance, risk appetite – there is a lot of data falling through the cracks that is not necessarily being tracked but is equally valuable. Internal client profiles held by advisors often lack rich, nuanced details about a client’s changing preferences, life events, personal views, and current thinking. This ‘missing’ data can reveal the truth about client satisfaction, allowing problems to be known, understood and fixed at an earlier stage, but wealth managers are not always capturing or leveraging it in ways that enable them to maintain a competitive edge.

Developing proactive communication

A wealth manager’s level of service and output is only as good as the data it has to work with. It’s within new analyses of data that a goldmine of opportunity lies. Artificial intelligence-led tools now coming onto the market are making it possible for firms to gather, mine and analyze both structured and unstructured data to provide advisors with a rich and realistic assessment of the client. Data analytics is moving beyond only hard facts and numbers, and encompassing communications data that contains the emotional quotient of the relationship.

Today, any wealth manager will use various channels for client communication beyond face-to-face meetings – be it telephone, online chat, email, or social media. What is important to note is that these channels collect information not only about what clients want, but also about their level of satisfaction. Using artificial intelligence to analyze communication with and about clients across all these communication channels will help organizations gain insights that improve service, identify risks and opportunities, and create long-lasting relationships with clients. This uniquely rich source of customer insight is not available to Google, Amazon and other such tech giants.

Intelligence about the cleint can further be used to populate customer relationship management (CRM) systems and empower wealth advisors. It gives them the ability to predict clients’ needs in a timely manner, get alerted about the clients’ life events, understand clients’ interest towards specific products, and use this information to build relationships further and truly tailor an offering.

Furthermore, client communication is the best source of insight into customer dissatisfaction. The language of complaints holds key indicators about the strength of any client relationship. Interactions with clients are the window into their priorities and provide early red flags. Crucially, it enables problems to be identified and precautionary steps to be taken before any minor issue of client dissatisfaction turns into a major one. This is the best way not only to enhance the user experience but also to increase customer stickiness.

Ultimately, understanding client communications will lead to enhanced client satisfaction, which in turn leads to reduced customer churn. This is a simple circle of success but a delicate one for wealth managers as the loss of even a single client could negatively impact the balance sheet. In a world where data is the differentiator across industries, findings ways to personalize effectively, gain the full picture around every client relationship, and eliminate the ‘might-have-beens’ is essential for a wealth manager to foster loyalty and stand out in an extremely competitive market.

Written By
Isabella Fonseca and Meghna Mukerjee, Aite Group

Isabella Fonseca and Meghna Mukerjee are both senior members of Aite Group’s Wealth Management team.

Isabella has over 20 years of experience as an international consultant, advising banks, brokerages, asset management firms, insurance companies, and technology firms on business, product, and technology strategy. She has been widely quoted in major publications, including the Financial Times, American Banker, Wall Street and Technology, Azienda Banca, Bank and Technology News, Waters Technology, Bloomberg, and Dow Jones.

Meghna researches and writes about regulatory and digital shifts impacting wealth managers, private banks, independent asset managers, and family offices across Europe and the Asia-Pacific. She also writes about private banking business models and market opportunities. Most recently, Ms. Mukerjee was the global editor of Private Banker International magazine, and has published work in New Statesman, The Daily Telegraph, and The Sunday Times.