Wealth managers benefit from building long-lasting client relationships

The world’s millionaires increase their assets held at a wealth manager by 15% over a 20 year relationship, benefiting the manager and demonstrating the importance of building long-lasting client relationships, according to a survey.

The report, from NPG Wealth Management and Scorpio Partnership, is the third in a four part series. The first looked at the importance of understanding a client’s values and motives when building a relationship whilst the second instalment assessed service delivery and digital tools in wealth management.

The findings published in the report are based on the responses of over 3,000 individuals worldwide with an average worth of $2.9 million (£1.7m). It found that high net-worths (HNW) who have been with their main financial providers for five years have just 42% of their investable wealth with a firm and would not consider consolidating more than 45% with a single wealth manager.

However, as the relationship length increases so does the amount of assets a client is willing to place with a wealth manager. By the time the relationship reaches 20 years, HNWs have, on average, 60% of their wealth with a single provider.

Sebastian Dovey, managing partner of Scorpio Partnership, said, “The commercial reward for wealth managers who maintain a consistent ongoing relationship with their client is very real so long as they continue to meet client expectations. These findings highlight why wealth managers need a clear picture of their customer experience. It is crucial for future growth.”

Understanding what each individual client values is important, as when asked about their reasons for staying with their primary wealth providers respondents answers were diverse. Good portfolio performance came out top, with 17% of participants selecting this reason, this was followed by solutions and services meeting their needs and being happy with the advice provided.

A worrying 11% said the main reason they were still with the main provider was either due to convenience or because it was too difficult to leave.

Overall, HNWs feel their managers perform well when it comes to relationships scoring them 78 out of 100 for both client-centricity and statements and reporting. A client-focused service, communication skills and research capabilities were all highlighted as elements contributing to the delivery of a great service.

The report added, “If having a satisfied customer base was not enough, wealth managers who successfully build relationships on a foundation of mutual learning have the opportunity to develop deeper partnerships with the global elite. 

“These clients do want to move their assets to a trusted adviser over time. The winners are those who can adapt to the changing lives of their customers.”

Photo:  Images of Money via Flickr

Further reading:

Futurewealth survey: millionaires increasingly using digital tools to manage wealth

Vital for wealth managers to understand investors’ values and motives

High net-worth investors plan to invest more amid rising confidence

High net-worths prepare to take bigger investment risks in 2014

The wealthy are not tax dodgers; they’re a positive force in society