What do the wealthy really want from their private bankers? A backdoor question in a newly-released report by FactSet and Scorpio Partnership, well-respected industry data trackers, might provide a clue. “Which company would you be most excited to see start a wealth management service?” FactSet asked its audience of high-net-worth individuals (HNWIs)—defined as those with more than $1 million.
The majority responded they wanted to see Google (GOOG) get into private banking.
More than brand recognition is at work here. HNWIs want a wealth manager who not only delivers information in a technologically-savvy way, but, more importantly, does so while providing “quality insight.” It ranks as the top criteria clients use to judge a wealth management firm’s credibility.
art, impact investing, or their retirement plans, clients are hungry for dynamic data that is reliable; 38% of the wealthiest surveyors said it’s evidence of a secure institution. It also needs to be uniquely tailored to the client. One 69-year-old responder stated, “advisors [should be] focused on providing clients with all the market information required to arrive at the investment decisions based on client profile.” He claims it’s a sign of a firm with a “good corporate culture.”
The survey further showed that clients want their wealth managers to deliver general or sensitive insights multiple times a month. The need is greater for clients under age 35, 30% of whom expect a firm to evaluate their risk profiles on a weekly basis; 16% said that is not enough and expect daily reviews. Email is the most popular method of communication.
While many wealth management firms are keeping up fairly well with their clients’ demands, investing in new tech products and integrating new platforms is tough for firms operating on legacy systems. “Tearing down a technology system is extremely expensive. When technology enhancements are made, they tend to be on prior systems that create interface and reliability issues,” says Doug Black, founder of Aronson SpringReef, a firm advising wealthy clients on their private banking services and fees.
But Black believes such clients’ demands will force a change within the industry. “People vote with their money. It’s not an overnight change, but those firms that provide clear, accurate information will be viewed as more credible—and also capable.” If his theory is right, we will see an accelerated growth of assets in firms that focus on implementing technologies that make the client smarter.
Clients are in fact so frustrated by the lack of real information and transparency, they are also demanding that an industry watchdog implement minimum standards of quality on investment technologies. Black believes the problem will take care of itself, viewing it as an industry issue rather than a regulatory one. The aforementioned competition to hold on to clients, or grab new ones, will organically prompt the tech upgrades needed....MOREPossibly also of interest:
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