Tag Archives: Wealth Manager

Why the wealth management industry is different, or not?

Are the current challenges seriously different?

My passion for the wealth management industry is undisputed and so is my believe in wealth managers. I seriously have the believe that most of these front end advisers serve the goal of helping HNWI’s in managing their wealth.

We all know the challenges the industry is facing; increased regulatory pressure, pressure on traditional income models, changing client behaviors, digital technology and the need for a revised business model.

At the same time I am very keen to collaboratively come up with solutions that might fit some of these challenges. But instead of making this wealth management specific people should be fair in understanding that these challenges are not the issue of the day for wealth managers only. Other financial services companies face similar challenges and this evenly is the case for other industries. The only difference is that wealth managers have a (long) personal relationship with their clients.

The ability to cope with these challenges and translate this into the necessary change therefore is the actual question to be answered. Apparently this turns out to be a sensitive subject. The subject of cultural change. I remember the first organizational change I experienced. I was an intern at a large Dutch private bank and the HQ decided to change some procedures in the way investment advisers had to provide investment advice to their existing customers. This turned out to be difficult task especially for the advisers already on their job for years. Why change, I am used to work like this and happy to do it this way? At the end the organisation changed, because the leadership decided to do so.

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Loyalty in Wealth management requires ‘Chameleons’

Loyalty is like a key performance indicator for wealth managers and worth of mouth referrals are the best leads to new clients. As wealth manager you focus on making your wealthy clients (HNWI) happy. If all (or most) of your clients are happy, we could argue that you do not have to worry about the size of the portfolio you are managing.

Unfortunately, the loyalty subject is not very easy to catch. The loyalty of a 60 year old HNWI will be achieved in a complete different way than for a 30 year old HNWI. Different life stages, different personal interests or different needs are just examples explaining this. Again flexibility is asked from the wealth manager and yet another example of the fact that a wealth manager needs to be a ‘Chameleon’ like. Without going to discuss the role and activities of the wealth managers too ‘broad’, the job of a wealth manager requires increasing flexibility in managing client relationships. HNWI demands have never been as high as they are today and because of the increased diversity of the HNWI population this requires this flexibility of them. Diversity has never been discussed so often.

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What is the issue in retaining client relationships after wealth transfers?

High Net Worth Individuals (HNWI’s), or millionaires, see their Wealth Manager (or bank, in this blog I continuously refer to Wealth Managers as such) as their most important service provider. Not surprising, clients need a sense of security with the Wealth Manager where they have entrusted their money. They expect Wealth Managers to act in their best interests. Many clients expect their banking products and services to be a commodity. The promise to protect and the ability to grow clients wealth is only part of what a bank should offer to promote customer loyalty.

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