Wealth Mgmnt

Strategies to Personalize the Wealth Management Experience

The personal touch in business these days has literally meant no touching allowed. In an industry that thrives on pressing the flesh, wealth management has been set back like many others. The advent of COVID-19 has served to intensify and accelerate the industry’s digital transformation, ensuring that the old-school approach of in-person advisors delivering personal attention to individual clients continued its demise. A decrease in personalization opens up a Pandora’s Box of issues for advisors. Just ask any mom and pop retailer what Amazon or the big box stores are doing to their business. Wealth management is no different. While big techs haven’t aggressively pursued this space yet, it can only be a matter of time when you consider the likes of Amazon moving into the insurance business, Google into banking, etc., etc. What makes the industry vulnerable to big tech advances? Its Achilles heel, the lack of personalization.

High net worth clients have high expectations when it comes to personalization and the management of their wealth. Skip Cowan, President of Cornerstone Partners, gives the following advice to those just starting in the industry. “Go out and find 10 clients that have $1 million and give them each your undivided attention. This will enable you to obtain a fee base that will allow you to get up and running. “Cowan notes that by providing this personalized service to a small number of clients, it is highly likely that they are going to be satisfied and will provide a positive experience that you can then use to leverage and grow the business.

Paradoxically, it can be the digitization of data and the analysis thereof, which can enhance a client’s experience. After all, this is what big tech does in the non-traditional realms that they have ventured into. Many wealth firms have already made significant strides in this regard by tracking, for example, data usage, log-in frequency, app downloads and trading activity, to name but a few. This has led some wealth managers in the direction of several new client demographics. Female investors for one. Studies show that women are adding $5 trillion annually to the global wealth pool and are more likely to engage with providers that focus on understanding their goals. Millennials and Gen Z’ers as well. Both segments are typically tech-savvy with high expectations relating to digital engagement. We know that wealth is being transferred from one generation down to the next, with the next generation having a very different idea of engagement in regard to how they would like to experience and understand approaches to wealth management. In order to attract these investors, firms need to embrace personalized digital marketing tools and target prospects with relevant, tailored content through social media channels. Such techniques were obviously unavailable to prior generations of clients. Tailoring advice may seem obvious, but once you get by Mr. Cowan’s 10 client model, it can feel like an insurmountable task to offer such hyper-personalization. The challenge is to provide excellent client service and perceived value so that investors will not be quick to move to lower cost robo-type advisors.

So how does one go about creating a hyper-personalized financial experience? To begin, you almost have to have a sixth sense about what your client is looking for, especially in the younger segments that we’ve mentioned. According to a 2019 Salesforce survey, 51 percent of consumers expect companies to anticipate their needs and offer relevant suggestions, even before first contact. To do so, advisors must truly understand and embrace each client’s inherent complexities, including specifics related to family, work, and community, in order to appreciate their current financial status and unique goals. A combination of big data and the use of AI is letting the larger players in the wealth management game advance. Morgan Stanley has developed a system, named Next Best Action (NBA) that generates highly personal recommendations that wealth managers can take to their clients. It used to take about 45 minutes to come up with a personalized investment idea for a client, but with the NBA system the process is now instantaneous.

The cookie cutter portfolio recommendations of the past are long gone. Each client has unique investment preferences, ethical beliefs, life goals, and risk profiles. This requires obtaining more data than ever from a client, which can often be tricky. It still takes an effective advisor to understand how to approach a client to obtain this personal information. From there technology takes over. The data must then be interpreted and grouped so that advisors can obtain 360-degree views of their clients, thus helping them to offer timely, informed advice.

Wealth Mgmnt