Meeting client expectations in a changing world
Wealth management clients are becoming more sophisticated every year, with access to a near infinite amount of data at their fingertips. The ease of access to information and services is causing pressure on firms to keep up with changing expectations or risk losing clients.
Historically, if a firm could offer great market insights with access to curated investments, it could differentiate itself to attract and retain clients. Now, trading strategies and access to nearly every part of the investment landscape are cheap (or free in many instances) and easily accessible. Firms are having to pivot to more financial planning and other value-added services.
Expanded offerings
Many of the larger independent wealth management firms are now offering a full suite of products and services such as estate planning, tax planning and preparation, financial planning, personalized direct indexing and many more. Bundling these services in-house or coordinating with outsourcing partners is becoming the standard as clients are now expecting to have most aspects of their financial lives managed in one place.
Increasing client expectations are contributing to industry consolidation as well. With the expectation of adding more services, there is little desire to pay significantly higher fees and most of the time, clients are expecting the fee to stay flat or decline. Margins compression is a hot topic in the industry as building out these services is expensive, but you risk losing clients if you do not.
The larger firms in the industry are ahead in expanding services, with many offering the full suite of services, including investments, accounting, taxes, insurance, estate planning, legal services and more in-house. With size and scale, the added services are often included in the fee for services or with a nominal charge for using the other service lines. This adds pressure on smaller firms to find ways to compete but they’re getting squeezed by the increased costs to build more internal infrastructure.
Connecting with your clients
Not every firm will try to build out a full suite of services, but specializing and hyperfocusing on the client experience will be key for many. With modern technology and data access, being able to custom tailor investments, advice and communications with clients will be the benchmark for success.
Fostering a sense of community amongst the client base and firm will help with client “stickiness” but it will also require firms to understand who their ideal client is, as unless you are one of the biggest firms, you likely cannot be all things to all clients. Maintaining these relationships cross-generation is difficult, as many in the next generation will change advisors when they inherit assets, but it needs to be a major focus of firms’ client retention strategy.
With organic growth and client retention becoming a focus in the industry, evaluating your service offering and client experience is imperative. Internal client retention programs will also be key in helping ensure you communicate effectively and at the right time with clients.
The future of connectivity
Digital data delivery has changed how the industry thinks about client communication. The old-fashioned approach of meeting once a year or once a quarter may not apply going forward, as other industries are connecting with clients on their phone or smartwatch in real time. The next generation of wealth management clients will expect a completely different delivery model than today.
How Wipfli can help
Wealth management firms have challenging times ahead as they look to rebuild their service and delivery models. Whether building in-house or via market partnerships, retaining clients will continue to be the focus.
If your firm is looking for new ways to effectively communicate, build relationships and deliver advice, contact Wipfli today. Our team of industry professionals has the experience to help you enhance your product offerings, so you can connect with future generations and keep your future clients satisfied.
