Poor performance is only one of the reasons clients leave their wealth manager.
Wealth management firms are one of many, among literally thousands of organizations globally for a client to choose from, all competing for their business.
While there are definitely ways for firms to establish their niche and distinguish themselves, thus capturing their share of their market, clients know they have options when things don't go well for them.
And below are some of the reasons they choose to get rid of their wealth manager.
Wealth management firms are one of many, among literally thousands of organizations globally for a client to choose from, all competing for their business.
While there are definitely ways for firms to establish their niche and distinguish themselves, thus capturing their share of their market, clients know they have options when things don't go well for them.
And below are some of the reasons they choose to get rid of their wealth manager.
There are benefits to more communication with clients. Consider these YCharts stats:
Underwhelming performance for an extended period is a sure way to lose clients.
And no amount of good communication or likability can overcome unsatisfactory results, at least over the long term.
The advisor and firm were hired to deliver results, and results they must deliver.
Poor performance can stem from many reasons, one of which being legacy technology and disjointed systems, making it hard to consolidate and analyze investment data in a timely manner.
Without real-time and accurate data, it’s hard to make informed decisions.
Additionally, if you're spending too much time on operational and admin work, that is time taken away from research and investment strategy, as well as time spent with the client.
What tools are you using to manage and integrate data and reports? How effective are they? Look for systems that streamline and automate activities, improve productivity, and enhance the client experience.
If poor performance is bad enough, then charging high fees is yet another dealbreaker.
Now, “high” could be a relative term, considering downward pressure on fees over the years, and only of which the largest of firms can withstand better than the rest.
But regardless, clients want to feel they are being charged fairly, of which it’s on the advisor to perform well to justify the fees.
It could be a mixed approach of cost cutting to offset lower fees, and tying back to points above, it means doing more to free up time, leverage technology, and focus on investment strategy.
Yes, clients will leave their advisor if they fall behind the times in technology.
One survey of 300 advisors found that 65% of them had lost business from clients or prospects because of outdated wealth management software.
Related, a Financial Planning survey found that only 38% of wealth managers surveyed say their firm has "definitely" focused on the right tools to remain competitive in the market.
This one summarizes everything mentioned above.
Poor communication, poor performance, high fees, outdated tech… all that is a recipe for loss of trust.
Furthermore, advisors who sell them products that benefit the advisor first over the client will also lose business.
The moment the client feels the advisor is no longer on their side, it’s over.
Good communication will go a long way. Listen to the clients' needs. Be transparent.
Bad communication leads to mistrust and is the main reason why clients leave wealth manager.
In that case, they will have less tolerance for poor performance and fees charged.
If performance is poor, take a look at existing practices.
What is the technology like? How much time is actually spent on investment-related activities or meeting with clients?
Free up capacity and consider outsourcing operational activities while leveraging machine learning and advanced automation.
Keep fees in line with clients’ expectations. Be prepared to cut costs in other areas to mitigate lost revenue from lower fees.
Angry clients can make it known to the world why they don’t like you, potentially driving away new business.
Likewise, happy clients will tell the world why they love you, and it helps you land new clients more easily.
Do what it takes to keep your clients happy, and you will stand out from other wealth managers.
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