American Marketer


Relationship management key for futurewealthy financial planning: report

June 5, 2015

The futurewealthy favor personal interactions for financial planning; image courtesy of Michael Kors The futurewealthy favor personal interactions for financial planning; image courtesy of Michael Kors


When the world’s emerging wealthy population is looking for financial advice, they are preferential toward relationship managers over product specialists, according to a new report by SEI.

In the United States, high-net-worth consumers show an even higher affinity for relationship managers, favoring them over specialists two to one across all areas of investment. As regulations place restrictions on the client-advisor relationship and digital solutions appear poised to replace personal contact, this report shows the continued importance of human interaction in the investment process.

"What might come as surprising to some is the fact that America’s futurewealthy prefer to work with a wealth manager over a financial specialist on most financial matters," said Al Chiaradonna, senior vice president of North America Private Banking at SEI, Oaks, PA.

"A relationship manager has a holistic view of a client’s financial picture and, as a result, can provide solutions and recommendations that take the big picture into consideration," he said. "Specialists can be extremely valuable in many instances, but they don’t have the same insight into client goals and progress against those goals across the board."

"Hanging in the Balance: Conversations with the Futurewealthy" is based on a global study from SEI, Scorpio Partners and NPG Wealth Management. The 3,113 respondents have an average net worth of $2.7 million.

Interpersonally invested
Consumers who have the most invested are more likely to prefer a relationship manager. Of those with more than three quarters of their assets at a particular firm, 59 percent will reach out to these individuals for all discussions, while only 10 percent of those with less than one quarter of their assets in a firm share the same partiality.

This same least invested group also shows the highest interest in digital platforms.

For those with a lot at stake, going through this trusted source can give them a better quality interaction, with someone who knows them and their needs.

"As we say in wealth management – one size never fits all," Mr. Chiaradonna said. "Every client has unique goals and priorities and wants to feel like the most important client, which can be hard to deliver in a scalable way.

"However, even though everyone has a unique financial picture, many of them can be driving towards similar goals," he said. "Wealth managers have an opportunity to re-orient their segmentation strategy to be more centered around goals based planning, which can have a big impact on their success.

"Understanding needs and preferences of the emerging wealthy provides an opportunity for relationship managers to be more effective in helping clients reach their desired goals."

Affluent family

Affluents want advisors to help guide them

While advisors are preferred, 49-58 percent of respondents want temporary or permanent access to specialists, calling for a balance between both. This is particularly true in the Asia Pacific region, where consumers trust them to bring new opportunities and technical understanding.

Asian consumers typically talk to a specialist seven times a year, compared to Europe and the Americas’ four to five times.

Mortgages and lending are the only area where U.S. wealthy consumers would rather have full access to a specialist over their relationship manager.

The wealthy want truly personalized, beneficial interactions with their advisors.

Fifty-one percent of those who have the most assets in a company are interested in hearing overall progress, whereas only 37 percent of less invested individuals desire the same. The heavily invested also show a penchant for streamlined interactions, in which their advisor distills and shares only the information most relevant to them.

SEI client interaction graph

Graph from SEI report

Consumers speak to their relationship manager 11 times a year on average, and the amount invested makes little difference. Those with 75 percent or more at a particular firm heard from their advisor 10 times, while affluents with less than a quarter invested spoke to their manager 9.5 times.

While these conversations are more about quality than quantity, there is a “sweet spot” in contact frequency. Those ranking their advisors moderate speak to their advisor 8.8 times per year, while advisors generating a poor score only communicate 6.3 times annually.

Consumers talking to their relationship manager between 10.7 and 11.9 times per year rate them good or very good.

"Wealth managers should have a strong understanding of their clients’ overall goals and financial picture and act as the go-to source for all issues," Mr. Chiaradonna said. "However, they should also be a connector, providing access to specialists whenever appropriate. Because time is a precious commodity, it is critical to respect client availability while remaining accessible. The findings suggest 11 to 12 meetings each year is a best practice, but confirming this preference is important.

"Wealth managers should also plan for these interactions by knowing what their clients want to discuss," he said. "According to our research, the top three most important features of an interaction with futurewealthy clients are: reviewing overall progress toward existing goals, discussing relevant developments and changes within their portfolio, and discussing new investment opportunities."

High touch over high tech
While digital has not replaced relationship managers, it has become a part of the financial planning process.

A 2013 report by Forrester Research found that 49 percent of investors check their investment account balances on a PC, while 3 percent use a mobile phone.

The “Trends 2013: Digital Wealth Management” report also found that computers are used more frequently than other modes of communication in all investment activities except communicating with financial advisors and contacting customer service. The report goes on to outline six digital trends that will change wealth management in 2013 such as mobile devices and social media (see story).

Beyond wealthy consumers' preferences for a single point person, they also show a predilection for smaller firms.

Ultra-affluent consumers appreciate the relationship-building culture fostered at boutique wealth management firms, according to a report by the Luxury Institute.

The New York-based Rockefeller Wealth Management firm received the highest score in the report, followed by Atlanta-based Atlantic Trust Private Wealth Management and Convergent Wealth Advisors. As wealth management firms continue to repair their reputations following the financial crisis, prioritizing relationships over transactions will be important (see story).

"The next generation of wealthy investors, particularly millennials, want digital access to everything– they want what they want when they want it," Mr. Chiaradonna said. "Access to their financial information is no different. They want 24/7 access to their accounts and a holistic view of their wealth.

"However, at the end of the day, they also want a relationship manager that can help make sense of it all," he said. "Firms need to consider adopting goals based segmentation strategies and digital tools that can make their wealth managers more efficient and free up their time to play the role of trusted advisor the next generation truly values.

"A wealth manager’s success depends directly on getting the right kind of support from their financial institution. They need integrated tools that will allow them to compete in the digital age. If your client wants to meet you 11 times a year, consider doing some of those through Skype or FaceTime, some of them in the office and some of them at the local coffee shop near their house, all while delivering a consistent experience and holistic goals-based view of their financial picture."

Final Take
Sarah Jones, staff reporter on Luxury Daily, New York