Loyal clients, after all, are incredibly valuable. Consultants, Bain, estimate that in retail banking the lifetime value of a promoter – someone who will actively recommend a bank – is worth 2 to 2.5 times that of a detractor. In wealth management where product margins are fatter and customers wield more power to make or break a reputation, the value of creating loyal advocates is arguably much higher.
But in the rush to engage these prized customers, it’s easy to forget to stop and question just what successful client engagement looks and feels like? What do clients want and expect from their private bank or wealth manager? What do they value in a relationship manager and what is likely to see them heading for the exit?
At Scorpio Partnership, we have a reputation for asking very direct questions of the wealthy investors we survey, so we decided to find out by using this year’s Futurewealth study to get under the skin of relationship management.
Drawing on the responses of 3,113 HNW investors who participated (with an average net worth of USD2.7 million) we have zeroed in on exactly what makes or breaks relationships between clients and advisors. The results make interesting reading - not least because they shatter a few long-standing industry myths. You can download a free copy of Futurewealth 2015: The art and science of relationship management to peruse at your leisure, but in case you can’t wait, here are some highlights to whet your appetite.
The corporate bear hug is firmly gripping the client
The myth within the wealth world is that when advisors walk out of the door, their most valuable clients follow. It’s a deep-seated opinion that leaves firms quaking in their boots when stellar relationship managers leave, but is it true?
But don’t get complacent
Mind you, firms aren’t off the hook entirely. As you’d expect, the reality is more of a fine balancing act between the banker and the bank. When advisors have really good relationships with clients, as evidenced by higher satisfaction scores, then those clients are far more inclined to follow their advisor’s lead to pastures new. Certainly, there is no room for firms to be complacent. When clients rate their relationship managers as “very good”, there is an almost 50:50 chance of them moving on if their main relationship manager leaves.
Which, really, shouldn’t surprise anyone. If advisors are good at their jobs and diligent in their approach to looking after their clients’ interests, it makes perfect sense that some of those customers will choose to stay loyal to a person rather than a rather less “human” firm, especially if that firm is a rather impersonal global banking brand.
Clients aren’t searching for the touchy-feely side of banking
Yet, don’t let this fool you into thinking that relationship managers exist simply as the touchy-feeling side of banking. Clients don’t just want a friendly face and in fact, arguably, they don’t want a friendly face at all. When asked which attributes matter most in a relationship manager, qualities like professionalism, integrity and intelligence matter more than empathy and sensitivity.
Our Futurewealthy respondents believe that their relationship manager has a very specific strategic function: namely to improve their financial situation. 59% of HNW clients said this was the main responsibility of their advisor.
This divergence of opinion between the generations is one example of why relationship management is as much art as it is science. Clients might be resounding in their calls for professionalism and dedication but these terms mean different things to different people. The art of a great relationship manager lies in predicting which clients value which type of service.
As younger clients sprint faster up the wealth curve and older generations live longer, the art of relationship management will become trickier than ever to pull off, and the science of forensically understanding what clients want and need will become more important than ever. There will always be good and bad relationship managers and there will always be some that are truly outstanding. In future, they will be the ones who perfect both the art and science of serving customers and managing wealth.
Futurewealth is an ongoing study of HNW attitudes, expectations and behaviours.Futurewealth 2015: The art and science of relationship management is the first of four papers that will be released during 2015, all focusing on the role of relationship managers. Findings are based on the responses of 3,113 of the world’s
futurewealthy, with an average worth of USD2.7 million. 36% of the sample live in Asia Pacific, 46% in the Americas and 17% live in Europe. Future papers will consider the contact strategy clients expect from their relationship manager, the responsibility of the relationship manager for delivering client outcomes and finally the fiscal and non-fiscal value of the relationship manager. For more information on Futurewealth or Scorpio Partnership please contact managing partner Sebastian Dovey E: firstname.lastname@example.org