Guy Flintham, co-founder and CEO of db corporate social platforms, explains how social media can help wealth managers head off client departures.
A recent study has confirmed what social media advocates have been telling wealth managers for some time now: if you want to retain clients, then you need to have a constant ear to the ground for what’s going on in their wider lives.
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Having quizzed 3,000 HNW individuals on the reasons why they have changed wealth manager in the past, Scorpio Partnership found a significant link between relationship breakdowns and big changes occurring in clients’ lives. For a fifth of HNW individuals internationally buying a new house had triggered a change and the same proportion had sacked their adviser upon starting a new job. The figures were even higher for Asia-Pacific, with almost a third of clients changing their adviser at the same time as their residence. Wealth managers will have known intuitively that big, stressful life changes can give rise to an "out with the old" mindset in clients. What they may not have known is just how strong the correlation is.
Pastures new
Of course, it’s not as simple as clients simply wanting a fresh start to go with their new home or career (although this could provide a neat juncture to let an unsatisfactory relationship go). The client’s risk profile or investment goals may have radically altered, or they may need regional coverage or expertise which renders their current provider inadequate. Equally, it could be a simple matter of referrals as clients move in new circles. Myriad psychological and practical factors are at play.
Knowing that life changes often trigger defections underscores just how important it is for advisers and institutions to stay abreast of how clients’ circumstances are evolving. It goes without saying that it is impossible to give sound financial advice without this knowledge, and wealth managers will already be asking probing questions at regular review meetings. The problem is that clients’ lives are changing all the time and by the time a review meeting has rolled around, they may have already have one foot out the door. Clients at risk need to be identified and their changing needs addressed as soon as possible.
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By GlobalData
Dynamic insights
Wealth managers are increasingly realising that their view of the client needs to be far more dynamic. They need deep and broad insights into clients’ circumstances, needs and wants which are as live as possible. Take risk-profiling. This was once a rather dry annual exercise, but is now increasingly seen as an ongoing, interactive process which can deepen relationships and wallet share (as well as enabling better quality advice). Similarly, limiting client engagement to periodic catch-ups now seems rather quaint.
Connectivity is the hallmark of the modern age and wealth managers need to reflect this in the way they service clients. They have shown themselves to have a huge appetite for mobile portfolio management tools and the like, but it is in communications that the really exciting developments are happening – particularly around social media.
When Morgan Stanley mandated its US adviser force to use LinkedIn and Twitter to communicate with clients back in 2012, the wealth management industry issued a collective gasp of compliance horror. Fears have since subsided and institutions now have a much clearer notion of what social media can do – namely, to allow them to communicate with clients and prospects on a personal level in a non-invasive way.
Wealth managers have rightly been concerned about privacy, security and control when thinking about all the social media platforms they can use for engaging with clients. The advent of "mezzanine" platforms like those db creates, which sit above platforms like Twitter, Facebook and LinkedIn and give institutions full control are removing residual fears. Given the ability to create VIP social media environments in which advisers can interact with clients, wealth managers can then fully leverage the marketing opportunities social media presents.
Relationship maintenance
But while social media is a hugely useful marketing channel, its real value in this relationship-driven business is to increase touch points with clients, embed the institution more fully in clients’ lives and generate much greater visibility in terms of where the client is "at" in real time. No one is disputing the primacy of face-to-face meetings and calls, but social media interaction is an extremely useful addition to the communications armoury. It is also a highly cost-effective one when we consider how expensive relationship managers’ time is.
To an extent, wealth managers are still coming round to the idea of communicating with clients via social media. But the fact remains that wealth managers need to be where their clients are, and that is on social media platforms. HNW individuals seem to be avid users of social media, even among the older generations, and neglecting these channels makes little sense from a business (or branding) perspective.
Social media may be cutting-edge technology, but fundamentally it’s just about conversations – being able to talk to clients regularly in a format which is convenient and engaging, and then getting maximum value from the exchange. Formal meetings (what we might think of as the big conversations) are of course paramount, but so too are the small interactions which help maintain relationships. Most people will have used social media to help keep long-distance friendships alive and this "little and often" approach translates readily into wealth management – particularly when the quality of the relationship depends on the timely exchange of information. Clients don’t necessarily divulge important information when, or indeed where, institutions would prefer them to. This is the reality which social media is helpingwealth managers to address.
