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Client-centricity through personalized wealth management

Personalized wealth management will be a key differentiator in the race to serve the next generation of digital-savvy clients. A Refinitiv report examines how the wealth industry can deliver personalized client experiences through data and analytics.

  1. A Refinitiv report on the transformation of wealth management finds that the transfer of wealth is among the top three industry concerns for all our survey respondents.
  2. Segmentation and customized wealth management solutions are crucial for the ever-evolving needs, wants and desires of existing and next generation clients.
  3. Data and analytics will be key differentiators for wealth managers, enabling them to serve more clients, more holistically, with greater insights.

Rapid advances in technology and ever-increasing digitalization are continuing to transform the wealth industry. As a result, wealth managers find themselves tasked with staying relevant, especially to a new, incoming generation of digitally savvy clients.

Becoming truly client-centric is crucial.

This means proactively adapting engagement strategies so that advisor-client relationships remain successful despite a changing client dynamic.

Refinitiv research — commissioned from global research and advisory firm Aite Group — collated the findings from executive interviews with leading wealth management firms worldwide. It found that 100 percent of respondents consider wealth transfer to be one of their top three concerns.

100% of respondents consider wealth transfer to be one of their top three concerns and are tailoring their offerings to the next generation. How to enable personalized wealth management

These managers are already starting to tailor their offerings to the next generation and, interestingly, those that have already invested in digital self-service platforms often treat next generation clients as a distinct persona.

Personalized wealth management

Developing these distinct personas helps create a deeper understanding of a client’s wants, needs, desires and unique character traits.

With a deep understanding of specific client personas comes a host of benefits, including enhanced transparency; better client relationships; more successful engagement; and improved customer loyalty, to name but a few. Ultimately these benefits help to foster stronger long-term relationships.

With a deeper understanding of their clients, many of our respondents are focusing on developing strategies to target specific client segments and offer fully customized and personalized wealth management solutions to meet the needs of those segments.

An overwhelming 90 percent of those interviewed had recently reviewed or revised their client segmentation models in line with the belief that a tailored and customized approach is the key to future success.

90% of wealth management firms have recently reviewed or revised their client segmentation models in line with the belief that a tailored and customized approach is key to future success. How to enable personalized wealth management

Segmentation and customization are key

This changing approach to meeting client needs moves away from the traditional assets under management (AuM) model.

While the AuM approach often incorporates an element of recognition of a client’s life stages, existing segmentation models largely ignore behavioral differences between clients, and provide little foundation for differentiated client engagement.

Unfortunately, incorporating factors other than AuM into client segmentation requires access to data and analytics that are commonly not available or not of sufficient quality.

Our research further revealed that many firms are narrowing their traditional product shelves and emphasizing firm-defined model portfolios that are tailored to the client’s risk profile and shift more focus onto relationship building.

The notable exception to this can be found in the ultra-high-net-worth segment, where managers need to cater to more specific needs, and may offer investment clubs, concierge services, or other tailored offerings.

Introducing the Transformation of Wealth Management Report: Five trends for 2020 and beyond

Timely and actionable insights

The development of meaningful personas and the ability to provide customized wealth management solutions in turn rely on access to accurate and complete data.

Our research reveals that data and analytics are quickly becoming key differentiators for wealth management firms, enabling them to serve clients more holistically and generate relevant, timely, and actionable insights for clients and advisors alike.

Results show that 61 percent of respondents viewed analytics and creating insights as “very important”, with 39 percent seeing it as “important” for their firms over the next 12-18 months.

61% of respondents consider viewing analytics and creating insights from data as very important for their firms over the next 12-18 months. How to enable personalized wealth management

Stumbling blocks, however, remain, with many wealth managers struggling to access reliable, accurate data.

More often than not, the data they rely on is inconsistent, dispersed across the organization, and/or hard to consolidate.

In fact, respondents reported that the top challenge associated with developing advisor analytic capabilities is building a clean database of advisor metrics.

Client-centric data models

In order to move towards more personalized wealth management, the industry should look to develop client-centric data models that connect the front and back offices seamlessly.

Technology can deliver efficient systems able to consolidate disparate product silos and legacy systems to produce clean, complete, and consolidated data.

This can then be used to power persona-based segmentation models, which will in turn deliver more personalized client experiences. Open technology frameworks and APIs are key enablers for implementing this type of strategy.

Even though our business is advisor-led, we would like to introduce technology urgently. We are somewhat behind the curve and trying to catch up

As the wealth industry continues along a journey of rapid transformation defined by emerging technology and changing client expectations, keeping client needs front and center will become ever-more crucial for firms as they work to remain relevant and profitable.

For more information on the latest trends and developments shaping the wealth management industry, download our full report on the Transformation of Wealth Management