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A Halloween Note on Client Expectations

Happy Halloween! How timely then to discuss a topic that keeps advisors and firms up at night.

I don’t think many wealth execs would pay consultants like me to tell them that client expectations are increasingly demanding, and that not meeting these expectations can lead to client attrition. It is well-known.

Indeed I have noticed that monitoring these expectations is rising on the agenda of private bank executives. A major reason for this is the knowledge economy we all live in, where transparency of information rules and customers can rate banks and vote with their feet. The question then becomes, how can client satisfaction be assessed and benchmarked, and how can firms better meet client needs to avoid them leaving?

In my view, it is important to start with the knowledge that wealth management firms are generally doing a solid job of meeting client expectations. Despite the turmoil the industry has faced over the past few years, such as volatile portfolio performance and constraints on the client experience from an unprecedented wave of regulation, firms and advisors are generally meeting client needs. However this statement masks several nuances, not least of which is that HNWIs are growing increasingly restless and demanding more from firms.

While regulation has been behind a big effort in improving customer protection and outcomes, it has also given rise to the unintended consequence of negatively impacting the customer experience. This can take the form of the increase in documentation customers have to complete to open an account, as well as impacts on the overall value proposition offered to clients since, in a bid to prevent tied-selling (especially RDR and MiFID II), regulation affects the integrated platform model and prevent firms from taking advantage of client referrals, credit and insurance offerings, and cross-selling opportunities.

Firms have to respond by continuing to innovate in their own business model and channel mix to meet ever-growing client demands and to further pin client satisfaction and retention not on investment performance but rather on overall service quality. Also, firms need to better leverage compliance efforts as a strategic opportunity rather than a tactical area to be overcome, and forge more collaborative dialogue with regulators and clients around the changes underway and to come.

Such efforts will help with the second part of the question posed earlier. As for the first question, where’s the venture capitalist who wants to help me create the tripadvisor for private banking?

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