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“Hold Me Close Don’t Let Me Go” – The Importance of Private Client Retention


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For the firms that provide financial, wealth, legal and tax advice to high net worth individuals, winning new clients is not something that comes easily or indeed cheaply (just ask the growing number of new online wealth management operators).  In wealth management for example it has been estimated that the resources required to acquire and sign up or onboard clients are 15 to 20 times greater than the resources required to service an established client[i].

The commercial importance of a client retention is clear but is likely to become harder over time. In an increasingly multichannel world with stiffer competition from both traditional and the aforementioned new sources, clients will be – as McKinsey observes – more “open to messages from competitors who will give them a reason to switch[ii]”.

It’s important for firms to understand fully what is going on in their current client base.  A vague attempt to aggregate fee earner/front office feedback is no longer sufficient. “Understanding the client’s perspective of value is only getting tougher” as PWC outlined in its 2013 global private banking and wealth management survey.

Knowing your place and knowing your client

Wealthy investors spread their assets across multiple firms and financial advisers – up to 80% may have their assets at more than one firm, with over a quarter spreading investments to four firms or more (see chart below). Cerulli Associates[iii] pegs the average number of provider relationships among the high net worth at 4.4.

Firms need to focus on being their clients’ principle or most “trusted” adviser to ensure they receive the greater “share of wallet” rather than becoming expendable.

In the short term asking clients for feedback and acting on it immediately demonstrates your clients’ importance to your business in a tangible way – making them feel like valued insiders.  Feedback programmes also provide an opportunity to remind clients of everything you do or could do for them – increasing their perception of the value of what you do for them and potentially opening up further/additional conversations leading to uncovering additional needs and/or assets.

Appealing to the next generation

Traditionally HNW individuals often inherited their advice relationships along with assets bequeathed to them but research studies[iv] have shown however that as many as half of heirs intend to fire their parents’ financial adviser. A culture of shopping around and a generation who do not necessarily see their ambitions, tastes, or demographic makeup reflected in their parents’ advisers will be tempted to make alternative arrangements.

Against this background Morgan Stanley Wealth Management in the US was reported earlier this month as “actively plotting to recruit female and younger financial advisers”[v]. Financial education for the next generation and embracing social media so that firms are “where their clients are” are oft quoted partial solutions.

I don’t dismiss these initiatives but there are no quick fixes but there seems to be a over-reliance on anecdotal evidence such as personal observations amongst younger family members as indicators of future trends – particularly around the changing use of digital tools. Better surely to invest in understanding existing clients’ wider family dynamics, getting to know the next generation directly and accessing or commissioning robust primary insight and research.

Planning on anecdote will be increasingly dangerous as we grope our way forward in the dark towards a future that is unclear – more dialogue with clients and future clients can only help illuminate our way more effectively.

[i] Source: The Fiduciary Network, Brave New World of Wealth Management: Opportunities, More competition, Demographics and Growth Conundrums. 2013.

[ii] Source: McKinsey, “The consumer decision journey.” June 2009 by David Court, Dave Elzinga, Susan Mulder, and Ole Jørgen Vetvik.

[iii] “High Net Worth and Ultra High Net Worth Markets 2013: Understanding the Contradictory Demands of Multigenerational Wealth Management.

[iv]Notably a study in 2009 by the US accounting and professional services firm Rothstein Kass and a 2014 survey by Morgan Stanley and Campden Research which suggested that only half of ultra high net worths under 40 are extremely or very likely to continue using their parents’ advisor.



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