Reducing Friction In The Advisory Relationship

April 24, 2017

[Editor’s note: The following originally appeared on Greg King is senior vice president of wealth management strategy at FactSet.]

When it comes to working with some of the wealthiest individuals in the world, there is no room for complacency.

While our research of 1,022 high net worth individuals (HNWIs) highlights that they are broadly satisfied with their primary wealth managers, we also uncovered that, as clients, they feel they are putting a significant amount of effort into their advisory relationships.

In an industry where expectations are evolving, wealth managers will need to do more to streamline the experience for their clients if they are to maintain high satisfaction levels and demonstrate the value in delegating responsibility of managing their wealth.

Integrating technology into the advisory relationship seems to be the key here. Technology should no longer be seen as a "nice to have" but rather a "must have." This is not just about creating efficiencies in the business model, but acknowledging that digital support is mutually beneficial to wealth managers and the HNWIs they serve.

For clients, technology delivers a more insightful and less-labor-intensive customer experience. For firms, technology presents the opportunity to deepen client engagement and move customers along the advisory spectrum toward a more delegated relationship.

The Advisory Spectrum

It is often seen in the wealth industry that the provision of financial advice is polarized. It is assumed that clients typically fall into one of two categories: either do-it-yourself, self-directed investors who require little support from professionals, or delegators who defer all financial decisions to experts.

Yet out of the sample of HNWIs we surveyed in 2016, just 41% fell neatly into either of these two profiles. The range of advisory relationships is, in fact, much broader, as shown in the chart below.

With stiffening competition among wealth managers, it’s critical to consider the 59% of prospective clients with investment preferences that fall somewhere between "do it yourself" and "delegator."


For a larger view, please click on the image above.


The most commercially attractive customers are those closest to the delegator end of the advisory spectrum: "partial delegators," who report that they follow the recommendations of their wealth manager most—but not all—of the time.

Partial delegators typically have high satisfaction levels and a larger proportion of their assets with their wealth management firms. However, they also indicate that the success of their advisory relationships is, in part, a function of their own contribution.

To impress these “partial delegators," wealth managers need to decipher how to reduce friction points in their relationship and deliver a more seamless service. These clients will require greater incentive to deepen their engagement with wealth managers and feel the effort they’ve invested in the relationship is justified, as we explore below.


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