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Vital for wealth managers to understand investors’ values and motives



Wealth managers need to engage with clients in order to understand their personal values and investment motives, or risk them becoming “unstuck”, a new study has said.

The research, conducted by strategy specialists Scorpio Partnership, NPG Wealth Management and asset management firm SEI, questioned over 3,000 of the global wealthy with average assets of $2.9m (£1.7m). It found that wealthy clients were becoming “unstuck” from their wealth managers during significant life events.

When asked if there were specific circumstances leading to their reason for beginning a new relationship with their main advisers, 16% of respondents cited the failure of a former financial provider as a reason. This figure rises to 25% among those worth over $4m (£2.4m).

Marc Stevens, CEO of NPG Wealth management, said, “The findings show a necessity to fully understanding the goals and objectives of every client before they become unstuck. This is about more than knowing product and service preferences; it is about what matters to them and how personal circumstances are evolving.”

The findings suggest that wealth managers need to ensure they fully understand what motivates every client. With sustainable, responsible and ethical investment gradually becoming more mainstream globally, this involves understanding a client’s ethical values and their view to sustainability and incorporating this into their investments.

Demand for sustainable, responsible and ethical financial advice has risen to 76%, from 73%, this year, according to figures from Blue & Green Tomorrow’s annual survey of the financial advice market. The responses show that demand for professional financial advice that considers what the wider impacts are is increasing.

Meanwhile, a survey conducted last year showed almost two-thirds of British investors said they wanted to be offered sustainable or ethical investment options.

However, what each investor consider to be important can vary widely. Research from the ethical bank Triodos found that 74% of investors would not want to be exposed to companies with human rights abuses in their organisation. Some 46% were opposed to arm and munitions and 40% would be put off investing in a company involved in animal testing.

The figures highlight how vital it is that wealth managers take the time to understand what their clients value.

The research of the global wealthy found that on average, they have three or four wealth management relationships each. This rises to 4.8 in the Asia Pacific region and falls to 2.1 in the Americas. Typically, Europe’s wealthy have 3.2 providers, with the main provider controlling 46.1% of the individuals investable wealth.

Sebastian Dovey, managing partner of Scorpio Partnership, said, “This means there is a huge opportunity for firms who can present the right value proposition to clients in the pre-purchase phase.”

Further reading:

Sustainable investment an ‘irreversible trend’, says ING exec

The ‘do-gooder ethical investment crowd’ have plenty of sectors to invest in

Motley Fool: responsible investment is about ‘doing good by doing right’

Sustainable financial advice: IFA Helen Tandy on values-based investment

Sustainable investment is about optimisation, not maximisation


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