Introduction

The business of wealth management is attractive for financial institutions that can get the formula right. However, recognizing the complex needs of wealth management clients is just the beginning. While product strategies are critical in building a wealth management business, at the end of the day even the most sophisticated wealth management product and service suites are easy to replicate. The battlefield then becomes the attitudes and feelings a client has toward the firm and how well the institution can influence that mindset in concert with its advisors. (A client's perception of a firm is most often dependent on the advisor or private banker who provides critical advice and champions the client's best interests inside the firm and beyond).

Wealth management firms thus find themselves asking tough questions:

• We know we want to capture a greater share of wallet, so how do we get our wealth management clients to trust us more?
• Our wealth management offering is very competitive, but how do we differentiate ourselves in the mind of our clients?
• How do we get our clients to recommend us to their high-net-worth peers and colleagues?
• How can our firm prioritize all of the projects we've identified to improve the client experience?

The difficult answers to these questions often reveal shortcomings in terms of how well wealth management firms understand their clients.

A new approach is needed - one that can shed light on why some clients are "advocates" of their wealth managers, while others are not. The potential upside to a firm is compelling: more than half of all advocates concentrate their assets with one provider, they recommend their firm to their friends, families and peers, and they are less likely to move their assets to competing firms. Yet according to our new study based on a survey of over 1300 high-net-worth individuals, the majority (57 percent) of clients are not advocates of their primary wealth management provider. This presents an enormous opportunity for progressive firms to make significant competitive strides.

Understanding who is an advocate and why or how they become one is the first step. Firms will then need to take that insight and apply it to their client-facing operations, product sets and channel strategies. Key opportunities include:

• Converting clients into advocates by strengthening staff dialogues with clients, increasing collaboration and enhancing staff retention.
• Building a client-experience analytics capability that enables the organization to better understand client attitudes and perspectives regarding key interactions.
• Refining operating models to address service deficiencies and better satisfy target client segments by offering consistent, high-quality experiences across channels.

Most important, firms will need to partner with their advisors to foster advocacy among their clients. Successful firms will enhance their brand proposition and create a distinct and sustainable competitive differentiator in this extremely competitive space - ultimately becoming customer focused enterprises.

This white paper was published in July 2008.

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